Oanh Kim Thi Tran

Faculty of Finance and Banking, 

University of Finance – Marketing, 

Ho Chi Minh City, Vietnam

kimoanh@ufm.edu.vn

ORCID 0000-0003-0118-1248

Innovations and liquidity risks: Evidence from commercial banks in Vietnam

Khoa Dang Duong*

Faculty of Finance and Banking, 

Ton Duc Thang University, 

Ho Chi Minh City, Vietnam

duongdangkhoa@tdtu.edu.vn

ORCID 0000-0001-9855-3751

*Corresponding author

Nhi Ngoc Thanh Nguyen

Faculty of Finance and Banking, 

Ton Duc Thang University, 

Ho Chi Minh City, Vietnam

B2000386@student.tdtu.edu.vn 

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.

Received: December, 2021

1st Revision: February, 2022

Accepted: July, 2022

DOI: 10.14254/2071-8330.2022/15-3/10

JEL Classification: G20, G21

Keywords: liquidity risk, Vietnam, training and development, mobile banking