Institutional Quality and Bank-Specific Determinants of Non-Performing Loans: Evidence from Vietnamese Commercial Banks

Abstract

The article evaluates the impacts of institutional quality and bank-specific factors on non-performing loans of Vietnamese commercial banks in the period 2010-2021. The study uses the S-GMM method for a panel data set of 22 Vietnamese commercial banks. The results show that institutional quality affects the impact of bank-specific factors on non-performing loans of Vietnamese commercial banks. Accordingly, in a better institutional quality environment, the impact of internal factors on banks' non-performing loans will be reduced and vice versa. Based on that, the study proposes some policy implications to improve institutional quality, thereby reducing non-performing loans for banks.