Funding liquidity, bank capital, and lending growth in a developing country

Figures & data

Table 1. Measurement of variables in the models

Variables	Description	Measure	Source
LG	Lending growth	The annual growth in total loans	Refinitiv Eikon
FUL	Funding liquidity	The ratio of total deposits on total assets	Refinitiv Eikon
CAP	Bank capital	The ratio of bank equity to total assets	Refinitiv Eikon
Size	Size of bank	Logarithm of total assets	Refinitiv Eikon
Profit	Bank profitability	Return on total assets	Refinitiv Eikon
Risk	Credit risk	The ratio of loan loss provisions to total loan	Refinitiv Eikon
Eff	Efficiency	The ratio of operating cost to total assets	Refinitiv Eikon
GDP	Growth of GDP	Annual GDP growth rate	World Bank database
INF	Inflation rate	Annual inflation rate	World Bank database

Table 2. Descriptive statistics

Variable	Obs	Mean	Std. Dev.	Min	Max
LG	502	0.341	0.558	−0.313	7.486
FUL	502	0.627	0.140	0.001	0.912
CAP	502	0.103	0.069	0.000	0.712
Size	502	18.113	1.560	11.884	27.003
Profit	502	0.009	0.007	−0.004	0.060
Risk	502	0.010	0.008	−0.010	0.054
Eff	502	0.504	0.153	0.162	1.115
GDP	502	0.059	0.013	0.026	0.075
INF	502	0.070	0.059	0.006	0.231

Note: LG, lending growth; FUL, funding liquidity; CAP, bank capital; Profit, bank profit; Risk, credit risk; Eff, Efficiency; INF, inflation rate; GDP, GDP growth rate. Source: Author’s calculation from research sample.

Table 3. Correlation matrix

	F.LG	FUL	CAP	Size	Risk	Eff	Profit	GDP	INF
F.LG	1.000
FUL	−0.282	1.000
CAP	0.510	−0.432	1.000
Size	−0.452	0.484	−0.672	1.000
Risk	−0.074	0.169	−0.065	0.293	1.000
Eff	−0.083	0.226	−0.116	0.007	−0.242	1.000
Profit	0.186	−0.291	0.429	−0.217	−0.017	−0.653	1.000
GDP	0.115	−0.072	0.029	−0.167	−0.002	−0.097	0.040	1.000
INF	0.167	−0.395	0.255	−0.319	−0.155	−0.187	0.246	−0.037	1.000

Note: LG, lending growth; FUL, funding liquidity; CAP, bank capital; Profit, bank profit; Risk, credit risk; Eff, Efficiency; INF, inflation rate; GDP, GDP growth rate. Source: Author’s calculation from research sample.

Table 4. Impacts of funding liquidity and bank capital on lending growth

	1	2	3	4
FUL	0.031	0.641*	0.325**	1.503***
	[0.14]	[1.88]	[2.12]	[6.24]
CAP	3.468***	5.611***	5.413***	9.218***
	[6.80]	[5.47]	[10.95]	[6.49]
FUL*CAP		−5.398**		−10.36***
		[−2.40]		[−4.13]
Size	−0.259***	−0.263***	−0.0162	−0.0563***
	[−9.02]	[−9.17]	[−0.86]	[−4.03]
Profit	−2.714	−2.252	−7.700**	−6.774***
	[−0.49]	[−0.41]	[−2.31]	[−3.07]
Risk	1.436	1.372	1.046	0.618
	[0.44]	[0.42]	[0.59]	[0.29]
Eff	0.277	0.256	−0.561***	−0.337**
	[1.12]	[1.04]	[−4.87]	[−2.63]
GDP	−1.057	−1.475	1.410***	0.818*
	[−0.53]	[−0.74]	[2.82]	[1.97]
INF	−1.349***	−1.098**	0.480**	0.894***
	[−3.24]	[−2.57]	[2.48]	[5.21]
LG			0.0836***	0.0976***
			[7.77]	[4.68]
_cons	4.664***	4.459***	0.0787	0.162
	[7.73]	[7.36]	[0.19]	[0.60]
No of obs	464	464	464	464
R-sq	0.452	0.459
AR1 test p-value			0.005	0.011
AR2 test p-value			0.309	0.390
Hansen test p-value			0.325	0.239

Note: Column 1 and 2 present fixed effects regression. Column 3 and 4 present system GMM. There are six control variables: bank size (Size), bank profitability (Profit), credit risk (Risk), bank efficiency (Eff), GDP growth rate (GDP), inflation rate (INF). Numbers in brackets are test statistics. *, ** and *** indicate significance at 10%, 5% and 1%, respectively.

Table 5. Non-linear impacts of funding liquidity and bank capital on lending growth

	1	2	3	4
FUL	0.879	3.294	0.0504	0.287**
	[0.77]	[1.32]	[0.22]	[2.29]
FUL*FUL	−0.726	−2.265
	[−0.76]	[−1.07]
CAP	3.599***	5.426***	0.142	1.416
	[6.68]	[3.46]	[0.14]	[0.92]
CAP*CAP			6.416***	8.056**
			[3.84]	[2.47]
Size	−0.259***	−0.011	−0.263***	−0.0425**
	[−8.99]	[−0.32]	[−9.30]	[−2.38]
Profit	−3.88	0.76	−2.948	−4.082
	[−0.67]	[0.12]	[−0.54]	[−1.66]
RISK	1.157	−0.424	0.725	1.333
	[0.35]	[−0.13]	[0.23]	[0.82]
Eff	0.244	−0.32	0.183	−0.315**
	[0.97]	[−1.15]	[0.75]	[−2.21]
GDP	−0.986	1.201*	−1.808	0.704*
	[−0.49]	[1.71]	[−0.92]	[1.95]
INF	−1.383***	0.681*	−1.067**	0.598***
	[−3.30]	[1.97]	[−2.56]	[2.97]
LG		0.136***		0.100***
		[3.40]		[10.07]
_cons	4.435***	−1.16	5.051***	0.725*
	[6.57]	[−0.91]	[8.39]	[1.87]
No of obs	464	464	464	464
R-sq	0.452		0.47
AR1 test p-value		0.002		0.003
AR2 test p-value		0.387		0.394
Hansen test p-value		0.119		0.276

Note: Column 1 and 2 present fixed effects regression. Column 3 and 4 present system GMM. There are six control variables: bank size (Size), bank profitability (Profit), credit risk (Risk), bank efficiency (Eff), GDP growth rate (GDP), inflation rate (INF). Numbers in brackets are test statistics. *, ** and *** indicate significance at 10%, 5% and 1%, respectively.

Table 6. Quantile regression of the impact of funding liquidity and bank capital on lending growth

	Q25	Q50	Q75
FUL	0.650***	0.660**	1.260***
	[6.02]	[2.15]	[6.61]
CAP	3.317***	3.507	9.954***
	[4.60]	[1.48]	[9.02]
FUL*CAP	−6.448***	−7.281**	−15.71***
	[−5.89]	[−2.03]	[−7.69]
Size	−0.0287***	−0.0578***	−0.110***
	[−3.43]	[−6.72]	[−6.43]
Profit	6.823***	8.344***	2.926
	[3.60]	[4.79]	[0.92]
Risk	−0.446	−0.116	−1.468
	[−0.54]	[−0.13]	[−1.63]
Eff	0.00189	0.0476	−0.307***
	[0.03]	[0.68]	[−3.15]
GDP	0.769*	0.922**	1.089
	[1.78]	[2.48]	[1.39]
INF	−0.104	0.213	0.756
	[−0.39]	[1.11]	[1.64]
cons	0.203	0.778***	1.596***
	[1.16]	[3.11]	[4.52]
No of obs	464	464	464

Note: There are six control variables, including bank size (Size), bank profitability (Profit), credit risk (Risk), bank efficiency (Eff), GDP growth rate (GDP), inflation rate (INF). Numbers in brackets are test statistics. *, ** and *** indicate significance at 10%, 5% and 1%, respectively. We performed test of differences in coefficients across quantiles, and confirm that the coefficients of FUL, CAP and FUL*CAP are significantly different from each other in the three quantiles.

Table

List of Vietnamese Commercial Banks
No.	Abbr.	Name of bank
1	ABB	An Binh Commercial Joint Stock Bank
2	ACB	Asia Commercial Joint Stock Bank
3	AGR	Vietnam Bank for Agriculture and Rural Development
4	BAB	Bac A Commercial Joint Stock Bank
5	Bao Viet	Bao Viet Commercial Joint Stock Bank
6	BID	Joint Stock Commercial Bank for Investment and Development of Vietnam
7	BVB	Viet Capital Commercial Joint Stock Bank
8	CTG	Vietnam Joint Stock Commercial Bank for Industry and Trade
9	EAB	Southeast Asia Commercial Joint Stock Bank
10	EIB	Vietnam Commercial Joint Stock Export Import Bank
11	GPB	Global Petro Sole Member Limited Commercial Bank
12	HDB	Ho Chi Minh City Development Joint Stock Commercial Bank
13	KLB	Kien Long Commercial Joint Stock Bank
14	LPB	Lien Viet Post Joint Stock Commercial Bank
15	MBB	Military Commercial Joint Stock Bank
16	MSB	Vietnam Maritime Commercial Joint Stock Bank
17	NAB	Nam A Commercial Joint Stock Bank
18	NVB	National Citizen Commercial Joint Stock Bank
19	OCB	Orient Commercial Joint Stock Bank
20	OJB	Ocean Commercial One Member Limited Liability Bank
21	PGB	Petrolimex Group Commercial Joint Stock Bank
22	PVC	Vietnam Public Joint Stock Commercial Bank
23	SCB	Saigon Commercial Joint Stock Bank
24	SGB	Saigon Bank for Industry and Trade
25	SHB	Saigon Hanoi Commercial Joint Stock Bank
26	SSB	Southeast Asia Commercial Joint Stock Bank
27	STB	Sai Gon Thuong Tin Commercial Joint Stock Bank
28	TCB	Vietnam Technological and Commercial Joint Stock Bank
29	TPB	Tien Phong Commercial Joint Stock Bank
30	VAB	Vietnam—Asia Commercial Joint Stock Bank
31	VBB	Vietnam Thuong Tin Commercial Joint Stock Bank
32	VCB	Bank for Foreign Trade of Vietnam
33	VIB	Vietnam International Commercial Joint Stock Bank
34	VNCB	Construction Bank
35	VPB	Vietnam Prosperity Joint Stock Commercial Bank