The Effect of Household Debt on the Stability of the Banking System in Vietnam

Abstract

Purpose: The aim of the study is to examine the impact of household debt on the banking system stability in Vietnam and proposes the policy implications to minimize the impact of household debt on the banking system.

Methods: The study uses the method of autoregression (Vector Autoregression) with microlevel and macro-level data from 20 commercial banks to examine the issue.

Findings: This study assesses the impact of household debt on the banking system in Vietnam and proposes some policy implications to promote positive effects and limit the negative impacts of household debt on the stability of the banking system in Vietnam.

Implications: Policymakers need to perfect the policy framework to reduce the risks of the Vietnamese banking system from excessive household debt.

Originality: This study is the first attempt in the Vietnamese context to examine the impact of family household debt on the Vietnamese banking system.