INNOVATIONS AND LIQUIDITY RISKS: EVIDENCE FROM COMMERCIAL BANKS IN VIETNAM
INNOVATIONS AND LIQUIDITY RISKS: EVIDENCE FROM COMMERCIAL BANKS IN VIETNAM

Summary/Abstract: Our study examines the relationship between innovations and liquidity risk of 37 commercial banks in Vietnam over 2010 – 2020. We employ the Ordinary Least Squares and dynamic system Generalized Method Moments to analyze a sample of 349 annual observations. Our findings show that innovations help commercial banks to reduce liquidity risk. For instance, commercial banks with mobile banking applications have a 0.24% higher liquidity than those without. Moreover, one percentage increase in training and development expenses generates additional 0.1451% liquidity. The impact of mobile banking applications is robust even if we employ alternative risk proxies such as RROA and Loan Loss Provision. Our study recommends that banks should develop mobile banking applications, and improve workforce and service quality via training and development programs.

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