Corporate governance and bank risk-taking: transitional economic evidence

Figures & data

Table 1. Variables definition for estimating bank stability efficiency.

$\mathrm{Variable}$	$\mathrm{Definition}$
$\mathit{Z}-\mathit{scor}{e}_{\mathit{i},\mathit{t}}$	The index is obtained from Equation (1)(1) $\mathit{Z}-\mathit{scor}{e}_{\mathit{i},\mathit{t}}=\frac{\mathit{RO}{\mathit{A}}_{\mathit{i},\mathit{t}}+E_{\mathit{i},\mathit{t}}/\mathit{T}{A}_{\mathit{i},\mathit{t}}}{\mathit{\sigma RO}{A}_{\mathit{i},\mathit{t}}}$(1)
$Q_{\mathit{it}}$ $\left(\mathrm{output}\right)$	$\mathrm{Total}\mathrm{assets}$
$W_1$ $\left(\mathrm{Input}\mathrm{price}\mathrm{of}\mathrm{deposits}\right)$	$\mathrm{The}\mathrm{ratio}\mathrm{of}\mathrm{interest}\mathrm{expenses}\mathrm{to}\mathrm{total}\mathrm{deposits}$
$W_2$ $\left(\mathrm{Input}\mathrm{price}\mathrm{of}\mathrm{labour}\right)$	$\mathrm{The}\mathrm{proportion}\mathrm{of}\mathrm{personnel}\mathrm{expenses}/\mathrm{number}\mathrm{of}$ $\mathrm{employees}$
$W_3$ $\left(\mathrm{Input}\mathrm{price}\mathrm{of}\mathrm{physical}\mathrm{capital}\right)$	$\mathrm{The}\mathrm{proportion}\mathrm{of}\mathrm{other}\mathrm{operating}\mathrm{cost}\mathrm{to}\mathrm{fixed}\mathrm{assets}$
$Z_1$ $\left(\mathrm{Fixed}\mathrm{netput}1\right)$	$\mathrm{Fixed}\mathrm{assets}$
$Z_2$ $\left(\mathrm{Fixed}\mathrm{netput}2\right)$	$\mathrm{Total}\mathrm{equity}$
$\mathit{Trend}$	$\mathrm{Technical}\mathrm{change}$
${\epsilon }_i$	$\mathrm{Error}\mathrm{term}$

Table 2. The descriptive statistics of variables.

Variable	Definition	Obs	Mean	Std. Dev.	Min	Max
STABEFF	Bank stability efficiency estimated from stochastic frontier analysis. A higher stability efficiency score implies the lower level of bank risk taking and vice versa.	332	0.32	0.17	0.05	0.87
BODFEMALE	The proportion of women directors on the board	320	0.16	0.15	0.00	0.60
BODIND	The proportion of independent directors on the board	320	0.10	0.10	0.00	0.57
BODS	The number of directors on the board	320	7.47	1.89	4	13
BODFOR	The proportion of foreigner directors on the board	320	0.07	0.16	0.00	0.75
BIG4	A dummy variable that takes a value of 1 signifies the presence of Big 4 audit firm, and 0 otherwise	333	0.82	0.38	0.00	1.00
BANK AGE	The natural logarithm of the number of years since the establishment of the bank	349	22.09	11.30	0.00	63.00
ROA	Return on asset ratio	341	0.91	0.80	−5.51	5.95
CAP	The proportion of equity capital to total assets	339	0.09	0.05	0.02	0.46
LATA	The ratio of liquid assets to total assets	339	0.32	0.12	0.05	0.82
SIZE	The natural logarithm of total assets	340	32.25	1.32	28.42	35.17
GDP	the annual growth rate	349	0.06	0.01	0.03	0.07
INF	The inflation rate	349	0.07	0.06	0.01	0.23

Table 3. The VIFs statistics results.

Variable	VIF	1/VIF
BODFEMALE	1.41	0.71
BODIND	1.31	0.76
BODS	1.60	0.62
BODFOR	1.41	0.71
BIG4	1.45	0.69
BANK AGE	1.92	0.52
ROA	1.40	0.71
CAP	2.40	0.42
LATA	1.38	0.72
SIZE	4.69	0.21
GDP	1.03	0.97
INF	1.46	0.68
Mean VIF	1.77

Table 4. The correlation matrix of variables.

	STABEFF	BODFEMALE	BODIND	BODS	BODFOR	BIG4	BANK AGE	ROA	CAP	LATA	SIZE	GDP	INF
STABEFF	1
BODFEMALE	−0.07	1
BODIND	−0.22	0.04	1
BODS	−0.05	−0.06	−0.17	1
BODFOR	−0.07	−0.26	0.22	−0.11	1
BIG4	0.12	−0.21	0.02	0.28	0.20	1
BANK AGE	−0.37	0.10	0.11	0.21	0.03	0.18	1
ROA	−0.11	−0.14	−0.08	0.17	0.16	0.20	−0.07	1
CAP	0.00	−0.22	−0.15	−0.13	0.04	−0.17	−0.34	0.32	1
LATA	0.04	−0.05	−0.04	−0.13	0.21	0.06	−0.32	0.26	0.09	1
SIZE	−0.21	0.08	0.21	0.43	0.17	0.42	0.65	−0.03	−0.64	−0.25	1
GDP	0.04	0.02	0.00	−0.03	−0.03	0.05	−0.04	−0.07	−0.03	0.00	−0.03	1
INF	0.22	−0.06	−0.37	−0.12	−0.10	0.00	−0.18	0.23	0.33	0.24	−0.36	−0.10	1

The table shows the correlation coefficients of all variables employed in the main equation.

Table 5. Baseline regression results of corporate governance on Vietnamese bank stability efficiency.

Dependent variable – Stability efficiency (STABEFF)	Predicted sign	System-GMM (1)	FEM (2)	REM (3)
Panel A – Coefficients estimation
BODFMALE	+	0.007*** (0.002)	0.029*** (0.007)	0. 029*** (0.007)
BODIND		0.017** (0.007)	−0.010 (0.010)	−0.012 (0.010)
BODS		0.003** (0.001)	0.016*** (0.004)	0.016*** (0.005)
BODFOR		−0.007*** (0.002)	−0.013* (0.004)	−0.013* (0. 007)
BIG4	+	0.002 (0.001)	−0.001 (0.004)	−0.001 (0.004)
BANK AGE	±	0.001*** (0.000)	0.017*** (0.001)	0. 017** (0.001)
ROA	+	0.002** (0.001)	0.003** (0.002)	0.003** (0.001)
CAP	+	0.013 (0.015)	0.091*** (0.029)	0.089*** (0.030)
LATA	+	0.006*** (0.002)	0.022* (0.011)	0.025** (0.012)
SIZE	+	−0.001 (0.001)	0. 011*** (0.003)	0. 010*** (0.002)
GDP	+	0.023*** (0.007)	−0.093 (0.067)	−0.089 (0.071)
INF	+	−0.013*** (0.003)	0.004 (0.017)	0.008 (0.017)
STABEFFt-1	+	1.036*** (0.008)
Constant		−0.046 (0.028)	0.301 (0.081)	0.324 (0.089)
Year		No	Yes	Yes
Panel B – Model fit
AR1 (p-value)		0.044
AR2 (p-value)		0.454
Hansen test (p-value)		0.620
No.of Obs		282	303	303
No.of Groups		25	25	25

Note: This table presents the results of main equation. Robust standard errors are in parentheses. *, ** and *** Significant at 10, 5 and 1 % levels, respectively.

Table 6. Robustness tests.

Dependent variable	ZSCORE (1)	NPL (2)	STABEFF (PRIVATE) (3)	STABEFF (4)
BODFEMALE	0.848* (0.496)	−2.019*** (0.692)	0.007* (0.004)	0.009** (0.003)
BODIND	2.428 (1.733)	−6.298** (2.869)	0.022** (0.010)	0.011* (0.006)
BODS	1.067* (0.571)	−2.397** (1.063)	0.006*** (0.002)	0.004** (0.001)
BODFOR	−1.587** (0.706)	−2.440* (1.242)	−0.007*** (0.002)	−0.004 (0.003)
BIG4	0.283 (0.383)	−1.891** (0.889)	0.001 (0.002)	0.001 (0.002)
BANK AGE	−0.013 (0.039)	0.005 (0.072)	0.001* (0.000)	0.001* (0.001)
ROA	1.354*** (0.001)	−0.136 (0.182)	0.001 (0.001)	−0.001 (0.001)
CAP	−6.879 (3.016)	7.656 (4.528)	0.004 (0.010)	0.045** (0.018)
LATA	0.118 (1.112)	−2.551 (2.685)	0.006 (0.004)	0. 008 (0.006)
SIZE	−0.173 (0.237)	0.815 (0.589)	−0.003 (0.001)	−0.001 (0.001)
GDP	−2.562 (5.148)	11.202 (7.780)	−0.061 (0.024)	0. 093 (0.067)
INF	2.036 (0.693)	9.917*** (2.811)	−0.009* (0.005)	−0. 010*** (0.002)
Covid				−0.012* (0.006)
Πt-1	0.294*** (0.028)	0.803*** (0.219)	0.033** (0.047)	1.019*** (0. 008)
Constant	4.133 (6.475)	−20.155 (16.939)	1.025 (0.014	−0.016 (0.040)
AR1 (p-value)	0.004	0.008	0.046	0.039
AR2 (p-value)	0.289	0.400	0.157	0.410
Hansen test (p-value)	0.999	0.822	0.567	0.677
No.of Obs	294	262	238	282
No.of Groups	25	25	21	25

Note: This table presents the results of main equation. Robust standard errors are in parentheses. *, ** and *** Significant at 10, 5 and 1 % levels, respectively.