The determinants of liquidity risk of commercial banks in Vietnam

Abstract

This research identifies factors that explain the liquidity of commercial banks in the Vietnam banking system from 2010 to 2015. Using the OLS regression method for analysis, it was found that: (1) the interbank market helps commercial banks improve their liquidity; (2) the larger the loan size, the higher the liquidity risk; (3) good credit risk management has a positive impact on liquidity risk management; and (4) long-term interest rate is negatively related to the liquidity of commercial banks. The research also makes recommendations on liquidity risk management policies to banks and policy-makers from the Government and the State Bank of Vietnam.