The Impacts of Bank-Specific and Macroeconomic Indicators on Bank Stability of Vietnamese Commercial Banks

Abstract

This study uses a balanced data of 27 Vietnamese commercial banks from 2012 to 2022 to investigate the effect of bank-specific and macroeconomic factors on banking stability from two complementary perspectives: the Z-score index and Non-Performing Loans. FGLS and SGMM estimates indicate that financial performance, tangibility asset growth, bank size, and equity positively affect bank stability. The results indicate that funding risk, operating cost efficiency, loan loss provision, financial leverage, and funding liquidity gap are the factors that reduce bank stability. In contrast, increasing economic growth and inflation make banks more unstable. We suggest that banking managers should consider the role of bank-specific determinants for banking stability.