Liquidity of Vietnam commercial banks and its determinants

Abstract

After the 2008 financial crisis, the liquidity of commercial banks is a special issue which is concerned by central bank to ensure the safety of the national financial system. Determining the main factors affecting the liquidity of commercial banks is important not only for the commercial banks but also for policymakers. The aim of this paper is therefore to identify determinants of Vietnam Joint Stock Commercial Banks liquidity. The data is collected from the audited financial statements of the 15 largest joint stock commercial banks in Vietnam, for the period from 2009 to 2020. The results of panel data  egression analysis showed that liquidity is mainly determined by internal factors such as equity ratio, short-term loan-to-deposit ratio, non-performing loan ratio, provision for credit risks. From the research results, some suggestions for bank administrators in making decisions to choose appropriate policies to increase the bank’s liquidity are given.