The impact of ownership structure on capital adequacy ratio according to Basel in commercial banks in Vietnam: A Bayesian approach

Abstract

This research employs a probabilistic regression model using the Bayesian method on a sample of 26 commercial banks in Vietnam from 2014 to 2023. The results indicate that the ownership threshold of shares held by the government (5% and above) negatively affects the Capital Adequacy Ratio (CAR). Additionally, control variables such as bank size, financial leverage, liquidity, and profitability through cost management efficiency also have a significant impact on CAR. In contrast, the previous year's capital adequacy ratio, the interaction between capital structure and leverage, and return on equity have a positive effect on CAR. The study's results yield several policy recommendations for the relevant regulatory authorities. These include rules on how to manage and govern banks where state-owned shareholders hold a significant number of voting shares in commercial banks, as well as rules for other commercial banks that must meet the capital adequacy ratio. This is particularly crucial in the context of promoting private sector contributions and accelerating the divestment of state-owned capital to focus on effective public investment.