Abstract
This study examines whether lending structure concentration leads to lower credit risk by employing GMM estimators of panel data for the Vietnamese banking system at the bank level by economic sector from 2009 to 2016. The advance point of this research is the effect of different industrial sector variables on credit risk. An important finding is that the Vietnamese commercial bank lending portfolios have, on average, higher levels of diversity across different sectors. Overall, the research finds that an increase in the mining and quarrying, manufacturing, electricity, gas and water, construction and real estate lending will contribute to the bank’s exposures to credit risk, while the lending portfolio of banks in wholesale and retail trade and other sectors reduces credit risk. This study suggests recommendations in lending activity for maintaining efficiency and stability in Vietnamese commercial banking system.
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