Title: Financial leverage and bank employee wage: evidence from an emerging economy

Authors: Liem Nguyen; Han Do; Nguyen Nguyen; Vy Le; Khuong Nguyen

Addresses: University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam ' University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam ' University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam ' University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam ' University of Economics and Law, Ho Chi Minh City, Vietnam; Vietnam National University, Ho Chi Minh City, Vietnam

Abstract: The effect of banks' leverage on employees' wage has received little attention thus far. This link is highly relevant in the context of developing markets with weak institutional quality and corporate governance. This paper seeks to examine the relationship between leverage and bank employees' wages in Vietnam, using a sample of commercial banks from 2007 to 2021. The research findings show that financial leverage exerts a negative effect on bank employees' salaries. The negative effect of leverage on bank employees' salaries implies that equity owners and bank managers tend to consider leverage as a bargaining tool to reduce labour costs, resulting in lower pay for employees. The result is robust to another measure of financial leverage. Based on the findings, we provide implications for the relevant stakeholders.

Keywords: wage; Vietnam; human capital.

DOI: 10.1504/IJWI.2025.150004

International Journal of Work Innovation, 2025 Vol.6 No.4, pp.404 - 415

Received: 19 Jul 2023
Accepted: 05 Oct 2023
Published online: 21 Nov 2025 *

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