Title: The determinant of capital adequacy ratio: empirical evidence from Vietnamese banks (a panel data analysis)

Authors: Pham Thi Xuan Thoa; Nguyen Ngoc Anh; Nguyen Khac Minh

Addresses: Center for Business Administration Studies, VNU University of Economics and Business, Vietnam National University, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam ' Graduate School of International Social Sciences, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan ' Faculty of Economics and Management, Thang Long University, Dai Kim, Hoang Mai, Hanoi, Vietnam

Abstract: The purpose of this study is to investigate the determinant of Vietnamese banks' capital adequacy ratio (CAR) by internal banking factors. Secondary data is collected from banks' annual reports in the period of 2009–2015. FGLS method and panel data are used to examine a regression model with CAR is the dependent variable and five independent variables: bank size (SIZE), loans (LOA), loan loss reserve (LLR), liquidity (LIQ), profitability (ROE). The results show that SIZE and LIQ impact negatively on CAR with significant meanings. On the other hand, LLR and LOA also affect CAR negatively but they are insignificant.

Keywords: Basel; capital adequacy ratio; CAR; capital adequacy ratio; Vietnamese banks; panel data; FGLS.

DOI: 10.1504/AAJFA.2020.104406

Afro-Asian Journal of Finance and Accounting, 2020 Vol.10 No.1, pp.60 - 70

Received: 19 Aug 2017
Accepted: 12 May 2018
Published online: 10 Jan 2020 *

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