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The role of control and power in the relationship between ownership structure and credit risk: a study from Vietnamese banks

Author

Listed:
  • Thi Kieu Khanh Pham
  • Thanh Tam Le
  • Duyen Thi Bich Pham
  • Phong Hoang Nguyen

Abstract

Purpose - The paper aims to examine the moderating role of factors such as foreign leadership and listing on the relationship between ownership structure and credit risk (CR) in Vietnamese commercial banks. Design/methodology/approach - Research data were collected from 28 commercial banks in Vietnam over the period 2009–2023. The system-generalized method of moments was employed to generate the estimated results. Findings - The research results revealed that (1) the negative impact of foreign ownership (FO) on CR was stronger for banks with foreign board members and (2) the positive impact of ownership concentration on CR was weaker for listed banks. Research limitations/implications - Recommendations are proposed to regulatory agencies and commercial banks to mitigate credit risks. Originality/value - This research develops theories related to the role of control and empowerment of foreign shareholders in mitigating CR in banks. Specifically, the developed theories emphasize that (1) the governance mechanism towards empowering and responsibilities of foreign shareholders would help utilize FO to mitigate CR and (2) the control and monitoring mechanism would mitigate the impact of concentrated ownership in increasing CR.

Suggested Citation

  • Thi Kieu Khanh Pham & Thanh Tam Le & Duyen Thi Bich Pham & Phong Hoang Nguyen, 2025. "The role of control and power in the relationship between ownership structure and credit risk: a study from Vietnamese banks," Journal of Economics and Development, Emerald Group Publishing Limited, vol. 27(2), pages 129-143, April.
    • Handle: RePEc:eme:jedpps:jed-09-2024-0322
    DOI: 10.1108/JED-09-2024-0322
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    More about this item

    Keywords

    Credit risk; Foreign ownership; Ownership concentration; Ownership structure; State ownership; G10; G21; C23;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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