Determinants of Bank Liquidity: Evidence from Vietnam

Abstract

This paper aims to investigate factors that affect bank liquidity in Vietnam for the period 2007 to 2018. By using liquid assets as a proxy of bank liquidity and employing the sample of thirty commercial banks in Vietnam as well as Bayesian linear regression via Random-walk Metropolis-Hastings algorithm, internal and external bank factors impact on bank liquidity are analyzed. The findings of this study show that bank size, bank capital, return on equity have a negative impact on bank liquidity, while return on assets, loan loss provision, inflation, GDP growth have a positive impact on bank liquidity in Vietnam.