Credit Risk and Performance of Vietnamese Banks

The study aimed to empirically investigate the effect of credit risk on the financial performance of Vietnamese banks. Secondary data was collected from the 15 commercial banks in the country over a 8-year period from 2014 to 2021. The study utilized nonperforming loans, capital adequacy ratio, impaired loan reserve, and loan impairment charges as indicators of credit risk, with return on assets serving as the measure of financial performance. Data analysis was conducted using a balanced panel data regression model, and the findings indicate that nonperforming loans and capital adequacy significantly influence the financial performance of Vietnamese commercial banks. Therefore, controlling credit risk is essential for maintaining bank financial performance.