Impact of credit risk management on the financial stability of Vietnamese commercial banks

Abstract

The research was conducted to understand the impact of credit risk management on the financial stability of 27 Vietnamese commercial banks. From the research results, the authors proposed some implications for credit risk management and solutions to promote financial stability for banks. The study used secondary data obtained from audited financial statements of banks in the period 2006 - 2020. Because the research model had intermediate variables, we used SEM to analyze and the data was processed by Stata. Research results show that non-performing loans and loan loss provisions had a direct effect on profitability and financial stability. Besides, there was an indirect relationship between credit risk management, profitability, and financial stability. The research proved whether the characteristics of Vietnam's banking system and the obtained results are compatible with the theory and previous studies.