Equity, government ownership, selling bad debts and risks of Vietnam’s Commercial Banks

Abstract

 This paper explores the effects of equity, government ownership and the selling bad debts of commercial banks to Vietnam Asset Management Company (VAMC) to the risks of Vietnam’s Commercial Banks in the period of 2005-2016. Employing pooled OLS, fixed effects and random effects estimations, this paper shows several concluding remarks: (1) equity capital positively affects bank stability and diminishes bank risks. More specifically, the relation between equity capital and bank risks is non-linear; (2) government ownership negatively affects bank stability and increases bank risks; (3) the selling bad debts of commercial banks to VAMC positively affects bank stability and diminishes bank risks; (4) GDP growth reduces bank stability and increases bank risks while inflation has a positive effects on bank risks.