Summary of Representative International Studies on Capital Adequacy

2.3.2. Domestic research

“ In addition to international studies, there have also been a number of domestic studies conducted on the topic of capital adequacy in Vietnamese commercial banks.

Vo Hong Duc, Nguyen Minh Vuong and Do Thanh Trung (2014) conducted a study to identify and quantify the impact of typical factors on the capital adequacy ratio of commercial banks in Vietnam during the period 2007 - 2012. This study was conducted on a sample of 28 commercial banks in Vietnam. The basis for selecting these banks was: (i) having announced the capital adequacy ratio; (ii) banks with charter capital of over 3,000 billion VND; (iii) these 28 banks accounted for about 83% of charter capital and 70% of the number of banks out of the total number of commercial banks at the time of the study. After collecting the data, the study sample included a total of 149 observations that were regressed using the OLS model. The results of the study showed that increasing the ratio of liquid assets and the ratio of credit risk provisions have a positive impact on the capital adequacy ratio. Meanwhile, bank size, capital mobilization ratio and return on equity have negative impacts on capital adequacy ratio. This study has not found quantitative evidence from the impact of financial leverage and lending ratio on capital adequacy ratio.

Pham Thi Xuan Thoa and Nguyen Ngoc Anh (2017) studied the factors affecting the capital safety ratio of Vietnamese banks in the period 2011

– 2015. Factors included in the model include: bank size, loan ratio, financial leverage, net interest income, credit risk provisions, liquidity. The research data includes 29 commercial banks in Vietnam provided by Stoxplus, after being processed, the data is regressed according to the panel data model with fixed effects (FEM). The research results show that net interest income and liquidity have positive effects while credit risk provisions and loan ratio have negative effects on the capital adequacy ratio. The effects of size and financial leverage are not statistically significant .

TABLE 2.1: Summary of typical international studies on capital adequacy

STT

Author	Nation	Time	Method	Independent variable	Sign dynamic
1	Alsabbagh (2004)	Jordan	2000 – 2008	Pooled (OLS)	Liquidity risk	+
					ROA	+
					ROE	-
					Interest rate risk	-
					Capital risk	Are not
					Credit risk	Are not
					Turnover Rate force	Are not
2	Büyükşalva rcı, A., & Abdioğlu, H. (2011)	Turkey	2006 - 2010	FEM (OLS)	Bank size	Are not
					Capital mobilization rate	Are not
					Loan to Equity Ratio asset	-
					Risk reserve ratio credit risk	+
					Asset turnover ratio liquidity	Are not
					ROA	+
					ROE	-
					Interest income ratio pure	Are not
					Financial leverage	-
3	Li Yuanjuan and Xiao Shishun	China	2005 - 2010	Pooled (OLS)	ROA	+
					ROE	-
					Earnings per share EPS section	Are not

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(2012)				Loan to Equity Ratio deposit	-
				Bad debt ratio	-
4	Abusharba, Triyuwono, Ismail & Rahman (2013)	Indonesia	2009 - 2011	Pooled (OLS)	ROA	+
					NPL bad debt	-
					Capital mobilization rate	Are not
					Asset turnover ratio liquidity	+
					Operating efficiency	Are not
5	Decra (2013)	Bosnia and Herzegovina	2005 - 2010	Pooled (OLS)	Bank size	-
					Capital mobilization rate	-
					Loan to Equity Ratio asset	-
					ROA	-
					ROE	+
					Financial leverage	+
					Debt provision ratio bad	Are not
					Net interest income to total assets ratio product	Are not
6	Bateni .L, H.Vakilifar d, F.Asghari (2014)	Iran	2006 - 2012	FEM (OLS)	Bank size	-
					Loan to Equity Ratio asset	+
					ROE	+
					ROA	+
					Risky Asset Ratio	Are not
					Capital mobilization rate	Are not

Meconnen .Y (2015)	Ethiopia	2004 - 2013	FEM (OLS)	Bank size	+
				Capital mobilization rate	+
				Loan to Equity Ratio asset	Are not
				Asset turnover ratio liquidity	Are not
				ROA	+
				ROE	-
				Interest income ratio pure	-
				Financial leverage	Are not
8	Aktas, R., Acikalin, S., Bakin, B., & Celik, G. (2015)	South Eastern Europe (SEE)	2007 - 2012	FEM (GLS)	Bank size	-
					ROA	+
					Financial leverage	-
					Asset turnover ratio liquidity	+
					Interest income ratio pure	+
					Banking risk	-
					Economic growth	-
					Inflationary	Are not
					Real interest rate	Are not
					Stock market volatility index Europe	+
					Coverage deposit	+
					Management Index	-

Klepczarek .E (2015)	EU	2013	Pooled (OLS)	ROA	Are not
				ROE	Are not
				Bank size	-
				Capital mobilization rate on liabilities	-
				Adjusted asset ratio risk adjusted to total assets	-
				Loan to Equity Ratio asset	+
				Inflationary	Are not
10	Odunayo and Joseph (2016)	Nigeria	2005 – 2014	FEM (OLS)	ROA	+
					ROE	Are not
					Credit risk	-
					Bar structure section	-
					Deposit structure	-
					Bank size	Are not
					Economic growth	Are not
					Inflationary	Are not
11	Masood .U (2016)	Pakistan	2008 - 2014	REM, FEM (OLS)	ROA	Are not
					ROE	Are not
					Loan to Equity Ratio asset	-
					Risk reserve ratio credit risk	+
					NPL bad debt	Are not
					Capital mobilization rate	+

				Equity Ratio property on property	+
				Level of concentration of ownership own more than 50%	-
12	Yahaya, SN, Mansor, N., & Okazaki, K. (2016)	Japan	2005 - 2014	FEM (OLS)	Capital mobilization rate	+
					ROA	-
					ROE	+
					Total assets	+
					Total deposit	-
					Total Loans	-
					Unemployment rate	-
					Inflationary	-
					Exchange rate	-
					Money supply	-
					Total product domestic GDP	-
13	Dhouibi .R (2016)	Tunisia	2000 - 2014	GMM	Lag 1 of the safety ratio full capital	+
					Voluntary disclosure of financial information main	+
					Bad debt ratio	-
					Debt provision ratio bad	-
					Bank size	-
					ROE	-
					Total product domestic GDP	-

				Management efficiency	+
				Dividends	-
				Ownership structure (public, state) outside)	Are not
14	Vo Hong Duc, Nguyen Minh Vuong and Do Thanh Trung	Vietnam	2007 - 2012	OLS	Liquid assets High	+
					Credit risk provision use	+
					Bank size	-
					Capital mobilization rate	-
					ROE	-
					Financial leverage	Are not
					Credit loan ratio use	Are not
15	Pham Thi Xuan Thoa and Nguyen Ngoc Anh	Vietnam	2011 – 2015	Pooled OLS, FEM, REM	Net interest income	+
					Liquidity	+
					Credit risk	-
					Credit loan ratio use	-
					Bank size	Are not
					Financial leverage	Are not

Source: Author's own compilation

Note : The impact sign “+”, “-” or “No” implies that the factor has a positive, negative or no impact (or a statistically insignificant impact) on the capital adequacy ratio.

In general, international and domestic research articles on factors affecting capital adequacy ratio have some common points as follows:

- Firstly, most of the recent studies have been conducted in developed countries, which shows that the capital adequacy ratio is more important in these countries than in developed countries. Because developed countries have early developed banking systems, strong financial potential and superior governance, they guide the operations of the entire world banking system and force developed countries to follow.

- Second, most research articles focus on internal factors of the banking system without expanding to industry factors and macro factors, while macro factors have an important impact on the entire economy including banking activities from mobilization to lending and all other operations.

- Third, a few studies that have considered the role of macro factors have found little or no explanatory significance. However, according to the above argument, these results are clearly unreasonable, perhaps the variables representing macro factors included in the research model are unreasonable or the research method used is not appropriate.

Thus, through the process of reviewing domestic and international research documents, the author finds it necessary to conduct a study to examine the impact of internal factors and macro factors on capital safety in the system of Vietnamese commercial banks. Therefore, in the following chapters, based on the review results, the author will propose internal factors and macro factors of the economy to be included in the model to examine the impact of these factors on capital safety in Vietnamese commercial banks.

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