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The impact of moneytary policy on insolvency risk at Vietnam commercial banks
Journal
International Journal of Science and Research
Date Issued
2020
Author(s)
Mai Thị Phương Thùy
DOI
10.21275/SR20701114245
Abstract
The study assesses the impact of monetary policy on Vietnamese commercial banks'
insolvency risk during the 2008-2017 period, with balanced panel data for 30 commercial banks
in Vietnam. Results from the study show that an increase in the M2 money supply creates an
increase in the Z index, which means a reduction in the risk of insolvency. The expansionary
monetary policy increases real estate prices, collateral value, and bank capital, resulting in higher
asset value for the bank. As a result, both deposit growth and credit growth in the economy have
positive signs; therefore, the activity of commercial banks results in efficiency and improved
profit, reducing the risk of insolvency. This result is consistent with the Borio and Zhu (2012)
reports.
insolvency risk during the 2008-2017 period, with balanced panel data for 30 commercial banks
in Vietnam. Results from the study show that an increase in the M2 money supply creates an
increase in the Z index, which means a reduction in the risk of insolvency. The expansionary
monetary policy increases real estate prices, collateral value, and bank capital, resulting in higher
asset value for the bank. As a result, both deposit growth and credit growth in the economy have
positive signs; therefore, the activity of commercial banks results in efficiency and improved
profit, reducing the risk of insolvency. This result is consistent with the Borio and Zhu (2012)
reports.
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