Article: Non-performing loans and capital adequacy ratio in Vietnamese commercial banks: moderating effects of ownership structure - a dynamic GMM analysis Journal: International Journal of Economics and Business Research (IJEBR) 2026 Vol.30 No.5 pp.43 - 70 Abstract: This study examines whether non-performing loans erode the capital adequacy ratio of Vietnamese commercial banks and whether government ownership moderates this relationship. Using a panel data of 34 banks during 2010-2024, with 490 bank-year observations after screening, the study employs descriptive statistics, diagnostic tests, feasible generalised least squares for robustness, and two-step system GMM as the main estimator to address capital persistence, unobserved heterogeneity, heteroskedasticity, autocorrelation, and endogeneity. The results consistently show that non-performing loans are negatively associated with capital adequacy. In the preferred GMM model, lagged capital adequacy is positive and significant, confirming adjustment persistence; bank size and government ownership increase capital adequacy; and the interaction between non-performing loans and government ownership is negative and significant. The findings indicate that government ownership strengthens the adverse effect of credit risk on bank capital, highlighting ownership structure as a boundary condition in emerging banking markets and policy-relevant banking research debates. Inderscience Publishers - linking academia, business and industry through research

Title: Non-performing loans and capital adequacy ratio in Vietnamese commercial banks: moderating effects of ownership structure - a dynamic GMM analysis

Authors: Nha Thanh Nguyen

Addresses: University of Finance – Marketing, 778 Nguyen Kiem, Duc Nhuan Ward, Ho Chi Minh City, Vietnam

Abstract: This study examines whether non-performing loans erode the capital adequacy ratio of Vietnamese commercial banks and whether government ownership moderates this relationship. Using a panel data of 34 banks during 2010-2024, with 490 bank-year observations after screening, the study employs descriptive statistics, diagnostic tests, feasible generalised least squares for robustness, and two-step system GMM as the main estimator to address capital persistence, unobserved heterogeneity, heteroskedasticity, autocorrelation, and endogeneity. The results consistently show that non-performing loans are negatively associated with capital adequacy. In the preferred GMM model, lagged capital adequacy is positive and significant, confirming adjustment persistence; bank size and government ownership increase capital adequacy; and the interaction between non-performing loans and government ownership is negative and significant. The findings indicate that government ownership strengthens the adverse effect of credit risk on bank capital, highlighting ownership structure as a boundary condition in emerging banking markets and policy-relevant banking research debates.

Keywords: capital adequacy ratio; CAR; non-performing loan; NPL; government ownership; moderating role; commercial banks.

DOI: 10.1504/IJEBR.2026.153851

International Journal of Economics and Business Research, 2026 Vol.30 No.5, pp.43 - 70

Received: 11 Jan 2026
Accepted: 12 Apr 2026
Published online: 28 May 2026 *

Title: Non-performing loans and capital adequacy ratio in Vietnamese commercial banks: moderating effects of ownership structure - a dynamic GMM analysis

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