The impact of ownership concentration on Bank Stability: Empirical evidence from Vietnamese Banks

Abstract

 Using data on 31 commercial Vietnamese banks in the period 2006 – 2018, this study investigate the impact of ownership concentration on the bank stability. The article measure the bank stability by Loan Loss Reserves to Gross Loans (LLRGL), Loan to Deposite Ratio (LDR) and Bank’s Z-score. Employing unbalanced panel data regression analyses, the results suggest that ownership concentration (proxyed by largest shareholder) has a significantly positive effect on both LLRGL and LDR. In the opposite, concentrated ownership has a negative influence on Bank’s Z-score. The reseach results support the hypothesis that ownership concentration reduces bank stability.