FACTORS AFFECTING CAPITAL ADEQUACY RATIO: EMPIRICAL EVIDENCE FROM VIETNAM’S COMMERCIAL BANKS

Abstract

This empirical study is conducted to define and quantify the effects of factors on the capital adequacy ratio (CAR) of Vietnam’s commercial banks. The study employs the FGLS technique on panel data for 28 commercial banks in Vietnam for the period from 2007 to 2012. Key findings from this study indicate that liquid assets (LIQ); loan loss reserves (LLR) are positively related to banks’ capital adequacy ratio. In addition, bank size (SIZE); deposit ratio (DEP); return on equity (ROE) negatively affect banks’ capital adequacy ratio. This study fails to provide empirical evidence to support a relationship between leverage (LEV); loan ratio (LOA) and banks’ capital adequacy ratio.

Keywords

• tỷ lệ an toàn vốn
• basel
• fgls
• ngân hàng thương mại
• việt nam