Overview

Original Research

EFFECT OF ECONOMIC FREEDOM ON RISKS OF VIETNAM'S BANKING SYSTEM

NGUYEN QUOC ANH

Vol 17, No 08 ( 2022 )   |  DOI: 10.5281/zenodo.7018670   |   Author Affiliation: University of Economics Ho Chi Minh City   |   Licensing: CC 4.0   |   Pg no: 1578-1588   |   To cite: NGUYEN QUOC ANH. (2022). EFFECT OF ECONOMIC FREEDOM ON RISKS OF VIETNAM'S BANKING SYSTEM. 17(08), 1578–1588. https://doi.org/10.5281/zenodo.7018670   |   Published on: 23-08-2022

Abstract

Economic freedom is an inevitable trend on a global scale, this has a certain impact on the operation of the banking system. The study was conducted to understand the effect of economic freedom on the risk of 22 Vietnamese commercial banks in the period 2010 to 2021. The study uses the fixed estimation method (FEM) and random estimation method (REM) and GLS for processing. Research results show that entrepreneurial freedom (a component of economic freedom) has a positive relationship with bank risk. Monetary freedom and financial freedom have not been shown to affect bank risk. The equity ratio and the ability to manage operating costs also have evidence to affect the risk of the banking system. Inflation also has an impact on bank risk. Then, the article proposes some governance implications for regulators.

Keywords

economic freedom, risk, financial freedom, commercial banking.