Factors Affecting Capital Adequacy Ratio of the Commercial Bank in Vietnam

This study applies Bayesian Monte Carlo simulations to evaluate the impact of factors on the capital adequacy ratio of commercial banks listed on the Vietnamese stock market in the period 2009–2021. The research adopted a Bayesian logistic model based on a cross-section of 25 listed banks. In a small sample, when frequentist estimators show their inefficiency, Bayesian estimation can provide meaningful results. The research results show that the factors that have a negative impact on the capital adequacy ratio (CAR) of commercial banks are the bad debt ratio, the credit risk provision ratio, the financial leverage, the deposit ratio and the credit risk ratio, bank size, the economic growth rate, and the interest rate. Meanwhile, variables such as loan ratio, profitability, liquidity, and marginal interest income are positively related to the capital adequacy ratio of 25 Vietnamese commercial banks.