The Role of Bank Funding Diversity: Evidence from Vietnam

摘要

This paper analyzes the impact of bank funding diversity on bank income and risk in emerging markets. We utilize a data sample which includes 37 Vietnamese banks for the period 2006-2015. We find that banks with diversified funding sources have advantages in improving profitability. However, we also find that banks with higher funding liquidity tend to participate in more risk-taking activities. The findings contradict the notion that banks which have access to diversified funding sources are able to improve profitability without increasing their risk-taking. The study has strong implication for banks managers and prudential authorities in emerging markets.