The Determinants of the Credit Risk in Developing Countries: An Empirical Study on Vietnamese Listed Banking Sector

Abstract

The research study is focusing on the determinants of credit risk in developing countries, Vietnam is one the most fastest growing economies in the world with the rate of roughtly 7 percent during the period of1986 – 2018. The bank system in the country has widely been expanded both quantity and quality. Using the secondary data in the period of 2009 – 2018 retrieving from Ho Chi Minh City Stock Exchange (HOSE), Hanoi Stock Exchange (HNX), and General Statistics Office with the theoretical framework of bank’s non-performance loans (so-called credit risk), the results demonstrate that that real GDP growth rate is significantly and negatively correlated with the credit risk in the bank system. Loan growth in the current year and a previous year can negatively generate non-performing loans in this year. In addition, a larger bank can perfectly have a lower level of bankruptcy cost and a higher level of growth rate related to a lower level of credit risk. Further, the bad debt, inflation, and net interest margin can positively generate credit risk.