THE FACTORS AFFECTING THE BANKING CRISIS IN VIETNAM

The banking sector in Vietnam has experienced various crises over the last decade, impacting the country's economic stability and growth. Understanding the factors that contribute to such crises is crucial for developing preventive measures and ensuring financial stability. This research explores the key determinants of banking crises in Vietnam, focusing on both internal and external factors affecting bank operations.The study aims to identify the main factors influencing the likelihood of a banking crisis in Vietnam and to propose an early warning system to help mitigate future crises. Additionally, the research seeks to provide recommendations for enhancing the resilience of the Vietnamese banking sector. The research employs a quantitative approach, utilizing a multivariate logistic regression model to analyze data from 40 Vietnamese banks over the period from 2013 to 2022. The variables considered include liquidity ratios, asset quality, profitability, ownership structure, and capital adequacy. The study uses secondary data sourced from annual reports and financial statements of the banks, along with relevant news articles and government publications. The findings indicate that factors such as customer deposits, bank borrowings, and non-performing loans significantly influence the likelihood of a banking crisis. The results suggest that banks with higher levels of customer deposits and bank borrowings are more prone to crises, while those with higher levels of capital adequacy are more resilient. The study also highlights the importance of effective risk management practices and diversified funding sources for maintaining financial stability.The study concludes that effective policy measures, including liquidity support, bad debt management, and capital injections, are crucial for enhancing the resilience of Vietnam’s banking sector. Moreover, warning thresholds were also introduced to signal a new financial crisis.