The interrelationship between liquidity creation and bank capital in Vietnamese banking

Purpose: The purpose of this paper is to investigate the interrelationship between liquidity creation (LC) and bank capital in Vietnamese banking between 2007 and 2015. Design/methodology/approach: A three-step procedure is used to measure LC. Thereafter, a simultaneous equations model with a three-...

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Tác giả chính:	Le T.
Định dạng:	Journal Article
Ngôn ngữ:	English
Thông tin xuất bản:	Emerald Group Holdings Ltd. 2021
Chủ đề:	Bank capital Liquidity creation Three-stage least squares Vietnam
Truy cập trực tuyến:	http://digital.lib.ueh.edu.vn/handle/UEH/61776 https://doi.org/10.1108/MF-09-2017-0337
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spelling	oai:localhost:UEH-617762021-08-21T10:31:40Z The interrelationship between liquidity creation and bank capital in Vietnamese banking Le T. Bank capital Liquidity creation Three-stage least squares Vietnam Purpose: The purpose of this paper is to investigate the interrelationship between liquidity creation (LC) and bank capital in Vietnamese banking between 2007 and 2015. Design/methodology/approach: A three-step procedure is used to measure LC. Thereafter, a simultaneous equations model with a three-stage least squares estimator is employed to examine the links between LC and bank capital. Findings: The findings show that large banks mainly contributed a strong growth in LC in Vietnam between 2007 and 2015. The findings also indicate that off-balance sheet activities only played a small role in LC. In addition, the findings indicate a negative two-way relationship between LC and bank capital in Vietnam. The results of the robust checks reinforce the main findings. Practical implications: The evidence shows that the implementation of Basel III may reduce LC and greater LC may increase banks’ insolvency. Consequently, this trade-off between the benefits of financial stability induced by tightening capital requirements and those of enhanced LC has important implications for Vietnamese authorities in strengthening the banking system. Originality/value: This study is the first attempt to investigate the interrelationship between LC and bank capital in Vietnam, in which fat liquidity creation and non-fat liquidity creation are used and alternative measures of LC are also employed to provide robustness to the main findings. © 2018, Emerald Publishing Limited. 2021-08-20T13:43:00Z 2021-08-20T13:43:00Z 2019 Journal Article 0307-4358 http://digital.lib.ueh.edu.vn/handle/UEH/61776 https://doi.org/10.1108/MF-09-2017-0337 en Managerial Finance Vol. 45, Issue 2 none Portable Document Format (PDF) 331 347 Emerald Group Holdings Ltd.
institution	Đại học Kinh tế Thành phố Hồ Chí Minh
collection	DSpaceUEH
language	English
topic	Bank capital Liquidity creation Three-stage least squares Vietnam
spellingShingle	Bank capital Liquidity creation Three-stage least squares Vietnam Le T. The interrelationship between liquidity creation and bank capital in Vietnamese banking
description	Purpose: The purpose of this paper is to investigate the interrelationship between liquidity creation (LC) and bank capital in Vietnamese banking between 2007 and 2015. Design/methodology/approach: A three-step procedure is used to measure LC. Thereafter, a simultaneous equations model with a three-stage least squares estimator is employed to examine the links between LC and bank capital. Findings: The findings show that large banks mainly contributed a strong growth in LC in Vietnam between 2007 and 2015. The findings also indicate that off-balance sheet activities only played a small role in LC. In addition, the findings indicate a negative two-way relationship between LC and bank capital in Vietnam. The results of the robust checks reinforce the main findings. Practical implications: The evidence shows that the implementation of Basel III may reduce LC and greater LC may increase banks’ insolvency. Consequently, this trade-off between the benefits of financial stability induced by tightening capital requirements and those of enhanced LC has important implications for Vietnamese authorities in strengthening the banking system. Originality/value: This study is the first attempt to investigate the interrelationship between LC and bank capital in Vietnam, in which fat liquidity creation and non-fat liquidity creation are used and alternative measures of LC are also employed to provide robustness to the main findings. © 2018, Emerald Publishing Limited.
format	Journal Article
author	Le T.
author_facet	Le T.
author_sort	Le T.
title	The interrelationship between liquidity creation and bank capital in Vietnamese banking
title_short	The interrelationship between liquidity creation and bank capital in Vietnamese banking
title_full	The interrelationship between liquidity creation and bank capital in Vietnamese banking
title_fullStr	The interrelationship between liquidity creation and bank capital in Vietnamese banking
title_full_unstemmed	The interrelationship between liquidity creation and bank capital in Vietnamese banking
title_sort	interrelationship between liquidity creation and bank capital in vietnamese banking
publisher	Emerald Group Holdings Ltd.
publishDate	2021
url	http://digital.lib.ueh.edu.vn/handle/UEH/61776 https://doi.org/10.1108/MF-09-2017-0337
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The interrelationship between liquidity creation and bank capital in Vietnamese banking

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