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The Role of Bank Funding Diversity: Evidence from Vietnam

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  • Xuan Vinh Vo

Abstract

This paper analyzes the impact of bank funding diversity on bank income and risk in emerging markets. We utilize a data sample which includes 37 Vietnamese banks for the period 2006–2015. We find that banks with diversified funding sources have advantages in improving profitability. However, we also find that banks with higher funding liquidity tend to participate in more risk‐taking activities. The findings contradict the notion that banks which have access to diversified funding sources are able to improve profitability without increasing their risk‐taking. The study has strong implication for banks managers and prudential authorities in emerging markets.

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  • Xuan Vinh Vo, 2020. "The Role of Bank Funding Diversity: Evidence from Vietnam," International Review of Finance, International Review of Finance Ltd., vol. 20(2), pages 529-536, June.
    • Handle: RePEc:bla:irvfin:v:20:y:2020:i:2:p:529-536
    DOI: 10.1111/irfi.12215
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    References listed on IDEAS

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    2. Daniel Ofori‐Sasu & Elikplimi Komla Agbloyor & Saint Kuttu & Joshua Yindenaba Abor, 2023. "Bank lending behaviour and systemic banking crisis in Africa: The role of regulatory framework," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1318-1345, August.
    3. Khoa Dang Duong & Hoi Vu Le & Duy Nhat Vu & Ai Ngoc Nhan Le, 2023. "Do Bank Funding Diversity and Bank Lending Affect Net Interest Margins? Evidence From Asia Markets Before and During the Covid-19 Pandemic," SAGE Open, , vol. 13(4), pages 21582440231, December.
    4. Vo, Xuan Vinh & Pham, Thi Hoang Anh & Doan, Thang Ngoc & Luu, Hiep Ngoc, 2021. "Managerial Ability and Bank Lending Behavior," Finance Research Letters, Elsevier, vol. 39(C).
    5. Manh Hung Pham & Nhat Minh Nguyen, 2023. "Bank funding diversity, risk and profitability: Evidence from Vietnam in the context of the Covid-19 pandemic," Cogent Business & Management, Taylor & Francis Journals, vol. 10(1), pages 2191305-219, December.
    6. Huynh, Japan & Dang, Van Dan, 2022. "Exploring the asymmetric effects of loan portfolio diversification on bank profitability," The Journal of Economic Asymmetries, Elsevier, vol. 26(C).

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