The effect of bank uncertainty to bank opacity in Vietnam

Abstract

The study examines the impact of uncertainty on bank opacity while particularly taking into account the moderating role of market structures. Using a sample of Vietnamese banks from 2007 to 2019, the paper measures uncertainty at the disaggregate level of the banking sector through the dispersion of bank shocks and regresses the bank opacity. The research introduces both structural and non-structural proxies of bank competition/concentration to better explore the role of market structures. Empirical regressions are conducted using the two-step system generalized method of moments (GMM) technique, and then verified by the least squares dummy variable corrected (LSDVC) estimator. The research result suggests that bank earnings opacity is less severe in periods of higher uncertainty. This implies that banks in a competitive markets need to reduce information asymmetry and more transparent in uncertainty.