The Effect of Banking Relationship on Firm Performance in Vietnam

Vu Huu Thanh, Nguyen Minh Ha

Abstract


The objective of this paper is to examine how banking relationship influences on performance of public listed firms in Vietnam. With a sample of 465 companies listed in Vietnam observed in period 2007 – 2010 and using regression method, the research finds that firm performance decreases as the number of bank relationships increases. If a firm establishes strongly short-term credit financing relationship with banks, the firm’s performance reduces. On the contrary, if a firm has strongly long-term credit financing relationship with banks, its performance increases. The effectiveness of using total assets is worse as a firm has strongly overall credit financing relationship with banks. Additionally, the study also indicates that asset tangibility structure has negative relationship with firm’s ROE, while assets have negative association with ROA. Turnover has positive association with firm performance. Finally, firms with higher state shares have less effective than ones with lower state shares.


Full Text: PDF DOI: 10.5539/ijef.v5n5p148

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.