The Impact of Monetary Policy on Insolvency Risk at Vietnamese Commercial Banks

The Impact of Monetary Policy on Insolvency Risk at Vietnamese Commercial Banks

Mai Thi Phuong Thuy

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The Impact of Monetary Policy on Insolvency Risk at Vietnamese Commercial Banks

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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.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Mai Thi Phuong Thuy. 2020. \u201cThe Impact of Monetary Policy on Insolvency Risk at Vietnamese Commercial Banks\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 20 (GJMBR Volume 20 Issue C4).

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GJMBR Volume 20 Issue C4

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-C Classification JEL Code: E5

E52

E51

Submission ReceivedDecember 8, 2019
Peer Review Double Blind
Handling Editor
Accepted December 31, 2019
Published January 15, 2020

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September 22, 2020

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