Factors Affecting Bank Credit Growth in Vietnam in the Period 2015–2024

Abstract

Purpose: This paper aims to analyse the macroeconomic and bank-specific factors affecting credit growth of commercial banks in Vietnam during the period 2015–2024, thereby clarifying the role of each group of determinants in a volatile economic environment.
Design/methodology/approach: The study employs panel data from 16 commercial banks listed on the HOSE and HNX over the period 2015–2024. Panel regression techniques, including the fixed effects model (FEM), random effects model (REM), and feasible generalised least squares (FGLS), are applied using Stata 17 to test the research hypotheses and address common panel data issues.
Findings: The empirical results indicate that liquidity risk (FGAP), equity capital (CAP), deposit ratio (DEP), and loan loss provision ratio (LLR) are positively and statistically significantly associated with bank credit growth (LGR). In addition, macroeconomic factors such as GDP growth and inflation (INF) also exert significant effects on credit growth. Among the estimated models, the FGLS specification provides the most appropriate results, with an R-squared of 44.1%.
Originality/value: This study provides updated empirical evidence on the determinants of bank credit growth in Vietnam for the period 2015–2024. The findings offer valuable policy implications for commercial banks and regulators to support credit activity and promote sustainable lending amid economic fluctuations.