Credit risk of Vietnamese commercial banks: does capital structure matter?

The study was conducted to evaluate the impact of capital structure on the credit risk of Vietnamese commercial banks in 2012-2020. The variables representing the capital structure of banks are the ratio of customer deposits to total assets (CDEP) and non-deposit liabilities to total assets (NDEP). The study uses the non-performing loan ratio on total outstanding loans (NPL) as a proxy variable for credit risk. By using Pooled OLS, FEM, REM, FGLS, and SysGMM methods, the research results show that the CDEP positively impacts credit risk. Meanwhile, the NDEP has a negative impact on the credit risk of Vietnamese commercial banks. On that basis, the study proposes measures to reduce credit risk for Vietnamese commercial banks.