Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289238 
Year of Publication: 
2022
Citation: 
[Journal:] Cogent Business & Management [ISSN:] 2331-1975 [Volume:] 9 [Issue:] 1 [Article No.:] 2119679 [Year:] 2022 [Pages:] 1-22
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This study is aimed to examine the impact of income diversification on bank risk in Vietnam before and during the COVID-19 pandemic by studying commercial banks over the period 2012-2020. By employing the fixed effects model (FEM) and general least squares model (FGLS), our main result shows that the higher the level of income diversification, the lower the risk of default. However, the diversification strategy should be conducted based on each source of non-interest income, in particular banks need to limit the increase in direct income from service activities, and reduce service fees to increase other indirect revenues, such as benefiting from transaction size and CASA value. This is different from previous studies. Besides, banks should improve the quality of foreign exchange business, securities investment and increase income from other non-interest activities. We also find that bank's default risk tends to decrease when the COVID-19 pandemic breaks out. However, contrary to our hypothesis, the impact of the COVID-19 pandemic on the relationship between income diversification and default risk of commercial banks in Vietnam has not been confirmed.
Subjects: 
bank risk
COVID-19 pandemic
default risk
diversification
interest income
non-interest income
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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