The Safety Threshold of Vietnam's Banks During Covid-19
Using the stress test, we measured the Comercial banks' withstand under pressure caused by the outbreak of COVID-19, which led to a freeze of the real estate market, a fall of the stock market, and an increase of non-performing loans (NPLs). The findings show positive and hopeful signs. Even th...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Universitas Merdeka Malang
2021-11-01
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| Series: | Jurnal Keuangan dan Perbankan |
| Subjects: | |
| Online Access: | https://jurnal.unmer.ac.id/index.php/jkdp/article/view/5929 |
| _version_ | 1828733146213908480 |
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| author | Pham Thi Thanh Xuan Trung Duc Nguyen Ho Huu Tin Le Thi Thanh Huyen |
| author_facet | Pham Thi Thanh Xuan Trung Duc Nguyen Ho Huu Tin Le Thi Thanh Huyen |
| author_sort | Pham Thi Thanh Xuan |
| collection | DOAJ |
| description | Using the stress test, we measured the Comercial banks' withstand under pressure caused by the outbreak of COVID-19, which led to a freeze of the real estate market, a fall of the stock market, and an increase of non-performing loans (NPLs). The findings show positive and hopeful signs. Even though the real estate and stock markets fell by 40%, resulting in a significant devaluation of the banks' loan collaterals, banks do not need to supplement provisions for credit risk. The high number of NPLs, which lead to increased provisioning, erodes net earnings, reducing the capital adequacy ratio (CAR). Banks can still meet both the 9% minimum CAR requirement and the 3% maximum NPL requirement. The study also identifies the maximum safety threshold of the Vietnamese banking system, which averaged up to a 50% increase in NPLs. Two of the country's top 10 banks are even able to maintain a CAR greater than 9% and an NPL ratio below 3%, although NPLs increase to 450% and 215% compared to these before the shock, respectively.
JEL: E50, G21 |
| first_indexed | 2024-04-12T22:24:33Z |
| format | Article |
| id | doaj.art-e8899cd386ff4d5193f45a647171aa6c |
| institution | Directory Open Access Journal |
| issn | 1410-8089 2443-2687 |
| language | English |
| last_indexed | 2024-04-12T22:24:33Z |
| publishDate | 2021-11-01 |
| publisher | Universitas Merdeka Malang |
| record_format | Article |
| series | Jurnal Keuangan dan Perbankan |
| spelling | doaj.art-e8899cd386ff4d5193f45a647171aa6c2022-12-22T03:14:14ZengUniversitas Merdeka MalangJurnal Keuangan dan Perbankan1410-80892443-26872021-11-0125477678610.26905/jkdp.v25i4.59292831The Safety Threshold of Vietnam's Banks During Covid-19Pham Thi Thanh Xuan0Trung Duc Nguyen1Ho Huu Tin2Le Thi Thanh Huyen3Center for Economic and Financial Research, University of Economics and Law, Ho Chi Minh City, VietnamBanking University HCMCInstitute for Development & Research in Banking Technology, University of Economics and Law, Ho Chi Minh City, VietnamBanking University Ho Chi MinhUsing the stress test, we measured the Comercial banks' withstand under pressure caused by the outbreak of COVID-19, which led to a freeze of the real estate market, a fall of the stock market, and an increase of non-performing loans (NPLs). The findings show positive and hopeful signs. Even though the real estate and stock markets fell by 40%, resulting in a significant devaluation of the banks' loan collaterals, banks do not need to supplement provisions for credit risk. The high number of NPLs, which lead to increased provisioning, erodes net earnings, reducing the capital adequacy ratio (CAR). Banks can still meet both the 9% minimum CAR requirement and the 3% maximum NPL requirement. The study also identifies the maximum safety threshold of the Vietnamese banking system, which averaged up to a 50% increase in NPLs. Two of the country's top 10 banks are even able to maintain a CAR greater than 9% and an NPL ratio below 3%, although NPLs increase to 450% and 215% compared to these before the shock, respectively. JEL: E50, G21https://jurnal.unmer.ac.id/index.php/jkdp/article/view/5929banking stress testcredit riskscovid-19capital adequacy rationon-performing loanssafety threshold |
| spellingShingle | Pham Thi Thanh Xuan Trung Duc Nguyen Ho Huu Tin Le Thi Thanh Huyen The Safety Threshold of Vietnam's Banks During Covid-19 Jurnal Keuangan dan Perbankan banking stress test credit risks covid-19 capital adequacy ratio non-performing loans safety threshold |
| title | The Safety Threshold of Vietnam's Banks During Covid-19 |
| title_full | The Safety Threshold of Vietnam's Banks During Covid-19 |
| title_fullStr | The Safety Threshold of Vietnam's Banks During Covid-19 |
| title_full_unstemmed | The Safety Threshold of Vietnam's Banks During Covid-19 |
| title_short | The Safety Threshold of Vietnam's Banks During Covid-19 |
| title_sort | safety threshold of vietnam s banks during covid 19 |
| topic | banking stress test credit risks covid-19 capital adequacy ratio non-performing loans safety threshold |
| url | https://jurnal.unmer.ac.id/index.php/jkdp/article/view/5929 |
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