FOREIGN OWNERSHIP AND BANK RISK-TAKING IN VIETNAM

Cung Huu Duc

doi:10.36690/2674-5208-2023-2-60-69

Authors

Cung Huu Duc Ho Chi Minh City Industry and Trade College

DOI:

https://doi.org/10.36690/2674-5208-2023-2-60-69

Keywords:

bank risk-taking, random effect, system GMM, foreign ownership

Abstract

Foreign ownership of banks in Vietnam refers to the participation and ownership of banks by foreign entities in the country's financial sector. Over the years, Vietnam has gradually opened up its banking industry to foreign investors as part of its broader economic reforms and efforts to integrate with the global economy. Foreign ownership of banks in Vietnam was initially restricted, but the government has implemented various measures to encourage foreign investment in the sector. This balanced approach aims to harness the benefits of foreign ownership while safeguarding financial stability and the interests of the domestic economy. Therefore, it may make the banks more risky and perform the study on the relationship between foreign ownership and bank risk taking become more important. The objective of this study is to examine the influence of foreign ownership on the risks faced by commercial banks in Vietnam. By analyzing data collected from a survey conducted between 2010 and 2020, involving 28 commercial banks in Vietnam, the empirical findings demonstrate that foreign ownership in Vietnamese commercial banks is associated with a reduction in risks. Additionally, the research reveals that lower risks experienced by Vietnamese commercial banks in the past are correlated with lower risks in the present. These findings contribute to the ongoing discourse surrounding foreign ownership in Vietnamese commercial banks, emphasizing the need for policymakers to prioritize the effectiveness of joint-stock foreign ownership.

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Author Biography

Cung Huu Duc, Ho Chi Minh City Industry and Trade College

Ho Chi Minh City Industry and Trade College (HITC), Ho Chi Minh City

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