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Abnormal loan growth and bank risk-taking in Vietnam: A quantile regression approach

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  • Tin H Ho
  • Tu DQ Le
  • Dat T Nguyen

Abstract

We empirically investigate and present evidence of nonlinearity and heterogeneity in the impact of abnormal loan growth on risk-taking in the Vietnamese banking system between 2007 and 2019, using a quantile regression method. Our results showed that abnormal loan growth initially helped banks to reduce risk-taking. However, this relationship was U-shaped and heterogeneous. The effect of abnormal loan growth was more significant for banks at the upper tail of the risk-taking distribution. Our findings also demonstrated that the turning point of abnormal loan growth increased throughout the risk-taking distribution. Hence, our findings suggest that the pursuit of excessive lending is more likely to result in greater bank risk-taking.

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  • Tin H Ho & Tu DQ Le & Dat T Nguyen, 2021. "Abnormal loan growth and bank risk-taking in Vietnam: A quantile regression approach," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1908004-190, January.
    • Handle: RePEc:taf:oabmxx:v:8:y:2021:i:1:p:1908004
    DOI: 10.1080/23311975.2021.1908004
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    Cited by:

    1. Matabaro Borauzima, Luc & Muller, Aline, 2023. "Bank risk-taking and competition in developing banking markets: Does efficiency level matter? Evidence from Africa," Emerging Markets Review, Elsevier, vol. 55(C).

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