Summary of PHD thesis: Impact of equity, credit risk on financial stability of Vietnamese commercial banks

The study has a general purpose of assessing the impact of equity, credit risk on the financial stability of Vietnamese commercial banks, based on the results of research to propose solutions, A proposal to increase the financial stability of Vietnamese commercial banks.

MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OFVIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

MAI BINH DUONG

IMPACT OF EQUITY, CREDIT RISK ON FINANCIAL STABILITY OF VIETNAMESE COMMERCIAL BANKS

SUMMARY OF DOCTORAL THESIS

Major: Finance - Banking Code: 62.34.02.01 Academic advisor: Assoc Prof Dr Nguyen Ngoc Thach

HO CHI MINH CITY - 2017

CHAPTER 1: INTRODUCTION 1.1 The urgency of the subject

The commercial banks bring into play a very important role for each economy, contributing to attracting capital and providing loans Business activities of commercial banks must always ensure stability, safety and profitability Along with capital markets through the stock market, the money market through the banking system is the place to provide capital to the economy With active mobilization of temporary idle funds in all organizations, individuals, all economic sectors (temporarily idle capital released from the production process, from the source of savings of the population ) through commercial credit, commercial banks have provided capital for the economy, fully meet the timely reproduction process Thanks to the operation of the commercial banking system, especially the credit business, enterprises have the conditions to improve their business activities, contributing to improving the efficiency of the whole economy Therefore, we can assert that the main subject to meet capital needs for business activities is commercial banks In addition, commercial banks are tools to regulate the macro economy In the operation of the market economy, the operation of commercial banks if effective will really become an effective tool for the State to regulate the macro economy Through credit and payment activities between commercial banks

in the system, commercial banks have contributed to expanding or reducing the amount of money in circulation Moreover, by granting credits to the economy, commercial banks carry out the flow of money, gather and divide the capital of the market effectively Thus, stabilization of the commercial banking system plays an important role in the financial system of Vietnam

Since the financial crisis of 2008-2009, many experts have been interested in studying financial instability that could lead to bankruptcy in many areas such as Altman (1968), Altman & GCG (1977) ), Zavgren (1985) Particularly in the banking sector there are researchs by Boyd & Graham (1986), De Nicolo (2000), Hesse & Cihak (2007), Soedarmono & ctg (2011), Rahman & ctg (2012), Fu & ctg

(2014), Chiaramonte & ctg (2015), Strobel (2015) These studies find the impact of many factors on the financial stability of commercial banks However, an issue that

is being debated is the impact of equity and credit risk on the financial stability of commercial banks In theory, equity plays an important role for a bank Equity funds not only finance the bank's investments but also help banks to be proactive in their business operations, increasing their competitive capacity and securing their credibility In addition, the theory also shows that credit risk occurs will affect immediately earnings of commercial banks Since then, affecting the business activities of commercial banks, creating instability

Some studies by Furlong and Keeley (1989), Keeley (1990), Van and Roy (2003), Jacob Oduor et al (2017) show that equity helps reduce risk and increase stability Finance of banks On the other hand, empirical studies have also shown that the credit risks faced by banks with loans have led to the bank's loss of liquidity and forced banks to bankruptcy This result is also supported by recent research by Björn Imbierowicz and Christian Rauch (2013)

In Vietnam, since the crisis of 2008-2009, the banking system of Vietnam has been gradually recovering due to its active efforts in dealing with bad debts of each bank

in particular and the Government in general Looking back at the instability of the Vietnamese banking system over time, equity and credit risk play an important role Therefore, it can be said that, in the current context of Vietnam, the consideration

of the impact of equity, credit risk on the financial stability of banks is necessary, especially in the mid-crisis period by Because determining the level and direction

of the impact of equity, credit risk on the financial stability of banks will help to develop sound and sustainable banking governance policies Starting from the above, the topic "Impact of equity, credit risk on financial stability of Vietnamese commercial banks" is necessary

1.2 Gap in research

Based on the results of the empirical study, which will be presented in the next, the research expects to fill some of the research gaps:

Firstly, based on prior research, research has focused on both the impact of equity and credit risk on the financial stability of commercial banks However, the research goes in two different directions: the first one examines the effect of equity on the financial stability of commercial banks such as Jacob Oduor et al (2017), Aggrawal

et Jacques ( 2001); Rime (2001); Godlewski (2004); Hakenes and Schnabel (2010); Abba et al (2013); Vu Thi Hong (2015); Le Thanh Ngoc et al (2015) the second direction of studying the impact of credit risk on the financial stability of commercial banks Björn Imbierowicz and Christian Rauch (2013); Beck & ctg (2009); Consuelo Silva Buston (2012) Domestic research studies to measure the impact of both equity and credit risk on the financial stability of Vietnamese commercial banks are limited

Second, the theories of research on the impact of equity on the financial stability of banks reveal many contradictions In the first place, the theory is that increasing the equity will reduce profits, thereby reducing the financial stability of the bank This view is rooted in the debate surrounding the capital structure theory of Modigliani and Miller (1958) Modigliani and Miller (1958) argue that capital structure does not affect the value of the business Secondly, higher equity will allow banks to make better choices in their businesses while at the same time better controlling credit activity, thereby increasing bank financial stability (Jensen and Meckling, 1976) These theories show that the direction of the impact of equity on the bank's financial stability over time, and the likely impact of equity to The financial stability

of Vietnamese commercial banks is non-linear and inverted U This implies that increasing the equity ratio could help increase the financial stability of Vietnamese commercial banks but only to a certain extent If the equity ratio exceeds this level, the increase in equity can reduce the financial stability of Vietnamese commercial banks due to the decrease in business performance Equity ratio at the point of reversing the financial stability of Vietnamese commercial banks is the optimal ratio

of equity, at which the financial stability of Vietnamese commercial banks is the

highest A study to prove this non-linear impact exists and find optimal equity thresholds that will increase the financial stability of Vietnamese commercial banks Third, in the context of the global financial crisis that took place in 2008 and 2009, the economies of many countries were sharply reduced In Vietnam, the world economic crisis has also been affecting a lot: on the stock market, foreign investors have the ability to recover capital and sell securities Hence, it will negatively affect foreign exchange reserves and stock market prices Exports will decline, which both affects the balance of international payments, trade deficit; It has also increased labor force loss, negative impact on the labor market; The real estate market will tend to stagnate and this market downturn will negatively affect other markets Some banks have lost their liquidity and withdraw their credit, which makes it difficult for businesses to access the capital market; Increasing interest rates, increasing capital costs, thus affecting business operations (Dinh Son Hung, 2010) Empirical studies by Consuelo Silva Buston (2012); Jacob Oduor et al (2017) found that, under the influence of the economic crisis, the impact of equity and credit risk

on bank financial stability was altered However, there are no studies in the country that compare the impact of equity and credit risk on the financial stability of Vietnamese commercial banks during and after the crisis The global financial crisis took place between 2008 and 2009

These theories show that the direction of the impact of equity on the bank's financial stability over time, and the likely impact of equity to The financial stability of Vietnamese commercial banks is non-linear and inverted U This implies that increasing the equity ratio could help increase the financial stability of Vietnamese commercial banks but only to a certain extent If the equity ratio exceeds this level, the increase in equity can reduce the financial stability of Vietnamese commercial banks due to the decrease in business performance Equity ratio at the point of reversing the financial stability of Vietnamese commercial banks is the optimal ratio

of equity, at which the financial stability of Vietnamese commercial banks is the

highest A study to prove this non-linear impact exists and find optimal equity thresholds that will increase the financial stability of Vietnamese commercial banks Third, in the context of the global financial crisis that took place in 2008 and 2009, the economies of many countries were sharply reduced In Vietnam, the world economic crisis has also been affecting a lot: on the stock market, foreign investors have the ability to recover capital and sell securities Hence, it will negatively affect foreign exchange reserves and stock market prices Exports will decline, which both affects the balance of international payments, trade deficit; It has also increased labor force loss, negative impact on the labor market; The real estate market will tend to stagnate and this market downturn will negatively affect other markets Some banks have lost their liquidity and withdraw their credit, which makes it difficult for businesses to access the capital market; Increasing interest rates, increasing capital costs, thus affecting business operations (Dinh Son Hung, 2010) Empirical studies by Consuelo Silva Buston (2012); Jacob Oduor et al (2017) found that, under the influence of the economic crisis, the impact of equity and credit risk

on bank financial stability was altered However, there are no studies in the country that compare the impact of equity and credit risk on the financial stability of Vietnamese commercial banks during and after the crisis The global financial crisis took place between 2008 and 2009

1.3 Objectives of the study

The study has a general purpose of assessing the impact of equity, credit risk on the financial stability of Vietnamese commercial banks, based on the results of research

to propose solutions, A proposal to increase the financial stability of Vietnamese commercial banks In addition, with the expectation of filling the research gap in Vietnam, the study also conducted: (i) examine whether or not the existence of non-linear effects of equity on financial stability of The Vietnamese commercial bank and, if so, find the optimal equity threshold at which the level of financial stability

of Vietnamese commercial banks is highest and (ii) compare the impact of the equity

capital ratio risk and credit risk to the financial stability of Vietnamese commercial banks during and after the global financial crisis in 2008-2009

To achieve the overall goal, the thesis focuses on addressing the following specific objectives:

- Measuring the financial stability of Vietnamese commercial banks in the period of 2008 - 2016;

- Studying the direction of the impact of equity capital, credit risk on the financial stability of Vietnamese commercial banks;

- Measure and evaluate the impact of equity, credit risk on the financial stability of Vietnamese commercial banks;

- Check whether or not the existence of non-linear impact of equity on the financial stability of Vietnamese commercial banks and, if so, find the optimal equity threshold at which the degree of financial stability Vietnam's commercial banks are the highest

- Comparison of changes in the ratio of equity and credit risk to the financial stability of Vietnamese commercial banks during and after the global financial crisis in 2008-2009

Based on the results of research and proposals on solutions and proposals to increase the financial stability of Vietnamese commercial banks

1.4 Research question

To achieve these objectives, the thesis responds to the following questions:

- How was financial stability of commercial banks in Vietnam in the period 2008 - 2016?

- What are the implications of equity, credit risk to the financial stability of Vietnamese commercial banks?

- What is the impact of equity, credit risk on the financial stability of Vietnamese commercial banks?

- Is there a non-existent impact of equity on the financial stability of Vietnamese commercial banks? And if so, what is the optimal threshold of equity in which the level of financial stability of Vietnamese commercial banks is highest?

- How is the impact of equity and credit risk on the financial stability of Vietnamese commercial banks during and after the global financial crisis in 2008-2009?

- In order to increase the financial stability, what commercial banks in Vietnam should implement solutions and recommendations?

1.5 Object and scope of the research

Research subjects: impact of equity, credit risk on financial stability of Vietnamese commercial banks

Scope of research: research conducted in 24 joint stock commercial banks in Vietnam The study wanted to cover all of Vietnam's commercial banks However, because the data used to calculate the variables in the research model was derived mainly from the audited financial statements, data collection is limited The audited financial statements of commercial banks are mostly available only from 2008 onwards Therefore, the author selected the study period from 2008 to 2016 with 24 commercial banks in Vietnam Besides, due to the topic of reviewing the 2008-2009 financial crisis period, it is appropriate to select the period from 2008 to 2016 by considering the 2008-2009 crisis

1.6 Data and research methods

Research data

Research using micro data of 24 commercial banks in Vietnam Source of data: Data

is collected from reliable sources such as: State Bank of Vietnam, General Statistics Office of Vietnam (GSO), Annual financial report of 24 commercial banks in Vietnam

Research Methods

The author uses a quantitative method based on studies by Björn Imbierowicz and Christian Rauch (2013), Jacob Oduor et al (2017) to model the effects of equity,

credit risk to the financial stability of commercial banks in Vietnam using Stata software with Panel Data data

Estimation methods for table data such as Fixed Effects, Random Effects, Feasible General Least Square (FGLS) for engraving This phenomenon

In addition to the above estimation methods, the study also regression models using the SGMM method for table data

1.7 Scientific contribution of the research topic

❖ Theoretically

Research on the methodology of equity and credit risk and the financial stability of banks and analyze the impact of equity and credit risk on financial stability The bank is linked to the context of the world financial crisis and its impact on the banking system in the country

❖ Methodically

First, the author assessed the effects of equity, credit risk on the financial stability

of Vietnamese commercial banks by quantitative research method with the support

of Stata 12.0 software Use table data with Random Effects and Fixed Effects Test Hausman to choose between Random Effects and Fixed Effects The author uses the Feasible General Least Square (FGLS) method to overcome self-correlation or variance across entities if they exist In addition, the estimation by the System General Method of Moments is also used to ensure that the results are reliable Second, the study also opened the door for further research The author's study uses the quantitative model of the impact of equity, credit risk on financial stability in Vietnamese commercial banks Further studies may further expand this study in two directions by expanding the breadth or depth of the study In terms of depth, further research could increase sample size in other countries and regions such as ASEAN, Asia, and use other quantitative measurement tools to test the impact of equity, credit risk on financial stability in commercial banks In terms of breadth, further studies may examine the impact of other factors on the financial stability of

Vietnamese commercial banks such as liquidity risk, financial management, ratio capitalization, profit,

❖ Practical meaning

Firstly, based on the study by Jacob Oduor et al (2017), Björn Imbierowicz and Christian Rauch (2013), , the study uses the econometric models that measure the magnitude of impact the combination of both equity and credit risk to the financial stability of Vietnamese commercial banks Estimates show that the regression coefficients of equity variables and credit risk are statistically significant This suggests that the increase in equity will increase the financial stability of Vietnamese commercial banks and the increased credit risk will reduce the financial stability of Vietnamese commercial banks This is an empirical contribution supplemented by empirical research in the country that is very limited in research

on this subject

Secondly, the results of the study are empirical evidence of the direction of the impact of equity on the financial stability of the bank over time, the results of the study examining the relationship between the two This variable shows that the impact of equity to asset ratio (EQTA) on the financial stability of Vietnamese commercial banks is non-linear and inverted U This implies that the increase in the ratio of equity to total assets (EQTA) could help to increase the financial stability

of Vietnamese commercial banks but only to a certain extent If the ratio of equity

to total assets (EQTA) exceeds this level, the increase in equity may reduce the financial stability of Vietnamese commercial banks due to the decreased business performance The ratio of equity to total assets at the point of reversing the financial stability of Vietnamese commercial banks is the optimal ratio of equity to total assets, where at this level the financial stability of Vietnamese commercial banks is the highest

Third, the study points to the effects of the financial crisis on bank financial stability, the statistically significant 5% statistically significant and negative, indicating that

in a crisis situation increasing the volatility of Vietnamese commercial banks In

addition, the study also shows the specific impact of equity on the financial stability

of commercial banks under the influence of crisis conditions: in times of crisis, the increase in equity ratio The total assets will increase the volatility of Vietnamese commercial banks

Fourthly, besides looking for evidence on the impact of credit risk on bank financial stability, the study also looked at this impact in the context of the financial crisis in

2008 and 2009 The regression results show that the regression coefficient of the crisis variable is statistically significant at 5% and the negative sign indicates that

in the context of crisis, the adverse effect of credit risk on stability The increase in the NPL ratio on total outstanding loans will reduce the financial stability of Vietnamese commercial banks when other factors remain unchanged , this is consistent with the results of previous studies of countries around the world

Finally, through the estimation results of the regression model, the author has proposed capital management and credit risk management for Vietnamese commercial banks in order to increase financial stability of commercial banks

1.8 Structural thesis

To achieve the objectives of the study, excluding the table of contents, the list of acronyms, the list of tables, the list of references, and the annex, the thesis is designed into five chapters, including The main contents are as follows:

- Chapter 1: Introduction

- Chapter 2: Theoretical bases on the impact of equity and credit risk on the financial stability of commercial banks

- Chapter 3: Research Methods and Data

- Chapter 4: Results of Study on the Impact of Equity and Credit Risk on Financial Stability of Vietnamese Commercial Banks

- Chapter 5: Conclusions and solutions to enhance financial stability of Vietnamese commercial banks

CHAPTER 2: THEORETICAL MECHANISM OF THE IMPACT OF OWNERSHIP AND CREDIT RISK WITH THE FINANCIAL STABILITY

OF COMMERCIAL BANKS

2.1 The theory of equity of commercial banks

2.1.1 The concept of equity of commercial banks

For commercial banks, basically, in the narrow sense, equity is money that shareholders, owners contribute (capital actually contributed) to enjoy the bank's income in the future In broad terms, bank equity is viewed as the capital of the banker for supporting banking operations Such definitions include the bank's reserve funds and are referred to as the capital of the shareholders Throughout the course of operations, equity can accumulate up or down However, for state managers, the issue of the adequacy of bank capital is crucial, especially after the global financial crisis has made one of the solutions that governments of some countries Used to rescue the banking system is to rescue and nationalize, using government funds to save the collapse of banks

2.1.2 Owners' equity of commercial banks

2.2 Credit risk theory at commercial banks

2.2.1 Credit risk concept

Credit risk is the potential loss that may occur as a result of customers not being able or able to fulfill their obligations fully or on time as committed Credit risk is the likelihood of an unexpected difference between actual and expected returns, the full amount of principal and interest that results in financial loss ie a decrease in net income and a reduction in net income market value of capital Among the types of risks to banking operations, CIs most often face credit risks When the credit risk occurs, the credit institution will not be able to recover fully and on time the credit granted because the customer fails to pay all debts to the credit institution as committed, for whatever reason causing damage to CIs, causing loss of capital and impaired ability to pay and ability to pay debts

2.2.2 Credit risk classification

According to Rose (2012), based on the underlying causes of risk, credit risk is divided into transaction and portfolio risk

Transaction risk consists of three main components: risk, risk, and operational risk Portfolio risk: a form of credit risk that is caused by limitations in the management

of a bank's loan portfolio, is divided into two categories: internal and collective risk Medium

2.2.3 Measurement of credit risk at commercial banks

Credit risk measurement in credit activities is the calculation of the specific number

of risk that the bank is facing and the losses it causes There are many methods to measure credit risk, some typical methods include:

Credit risk measurement based on reserve (Bangladesh Bank, 2010)

Estimation of credit losses is based on the Internal Basis II (IRB) database

Due to the difficulty of data collection, the credit risk in this study was calculated

by the credit risk measurement based on the reserve level As such, the ratio of bad debt to total outstanding loans will be used by the author to represent credit risk

2.3 Theoretical basis on financial stability of commercial banks

2.3.1 The concept of financial stability

2.3.2 The concept of financial stability of banks

The financial stability of commercial banks is achieved when the banks operate smoothly, not affected by the current and future unwanted agents, which are firmly supported by economic shocks The financial stability of banks may be interrupted

by the operation of internal financial factors and strong shocks leading to vulnerabilities Shocks can come from the external environment, macro factors, the role of creditors and debtors in banks, policies or changes in the institutional environment Any impact Shocks to vulnerabilities can lead to the collapse of commercial banks and disrupt banking intermediaries and intermediaries To be more serious, it can lead to financial crisis and the implications for the economy

2.3.3 The importance of banking and financial stability

2.3.4 The measure of financial stability of the bank

Finding a way to measure the financial stability of the banking system and anticipating instability that could lead to bankruptcy is always one of the top concerns of researchers financial sector Historically, many methods have been developed to do this, such as:

Method for measuring financial stability by Merton model

Method for measuring stability by CAMEL model

The method of measuring financial stability by Z-score

2.4 The theory of the impact of equity on the financial stability of banks

Debates on the impact of equity on the financial stability of banks have recently formed two theoretical perspectives on this impact (Thakor, 2014)

2.4.1 The theory of increasing equity reduces the bank's financial stability

The first theoretical view is that increasing equity will reduce profits thereby reducing the bank's financial stability This view is rooted in the debate surrounding the capital structure theory of Modigliani and Miller (1958) Modigliani and Miller (1958) argue that capital structure does not affect the value of the business However, this conclusion is only true in perfect market conditions and in reality this

is unlikely De Nicolo & Turk Ariss (2010) argue that capital is one of the inputs to the bank's operations The increase in customer deposits in total capital, ie, the reduction in the equity ratio of total assets, will help increase the business capital for the bank to improve profitability thereby increasing the stability the bank's financial position Huang and Ratnovski (2009), based on OECD data, found no relationship between bank capital and business performance In other words, it is impossible to conclude with certainty that bank capital will always extend financial stability

2.4.2 The theory of increasing equity increases the financial stability of the bank

The second theoretical view that higher equity will enable banks to make better choices in their businesses while at the same time better controlling credit performance, thereby increasing financial stability Bank This theoretical view

supports the role of equity in the financial stability of banks in three respects (Matten, 1996)

2.5 Theory of the impact of credit risk on the financial stability of banks

Credit risk affects the probability of bank default, which reduces the bank's financial stability in three ways:

First, the risk of undermining the credibility of a bank, a big risk bank, is a bank that does not operate effectively

Second, Berger, AN, and partner (1997), Boyd, J H, and cs (1988), Salas, V., and

cs (2002) show that the risk of insolvent partially bank The reason is that the risky

credits make repayment difficult, while the deposits and savings of the people still have to pay on time, while not mobilizing capital Due to the loss of prestige, so the withdrawers see the situation of the Bank as the withdrawal of more money, resulting in difficulties in the payment phase, resulting in financial instability Commercial banks

Third, according to Cai, J., and partner (2008), He, Z., and partner (2012), Eklund,

T and partner (2001), Dermine, J (1986) Blair and partner (1978), the risk that

results in declining returns due to the risk of financial loss

The explanation of the impact of credit risk on the bank's financial stability is considered by the author through this transmission effect Some of the theoretical explanations for this effect may be as follows: Asymmetric Information Theory, Representation Theory

2.6 Overview of related studies

2.6.1 Studies use the Z-score to measure the financial stability of commercial banks

The use of Z-scores to measure the financial stability of commercial banks has attracted many domestic and foreign researchers Studies such as Boyd & Partner

(2006), Soedarmono & partner (2011), Rahman & gcg (2012)

Local researches include Nguyễn Đăng Tùng & Bùi Thị Len (2015), Hoàng Công Gia Khánh & Trần Hùng Sơn (2015)

2.6.2 Studies on the impact of equity on the financial stability of commercial banks

International studies on the impact of equity on the financial stability of commercial banks can be cited as: Aggrawal and Jacques (2001), Rime (2001), Godlewski (2004) ), Aggrawal and Jacques (2001), Abba et al (2013), Jacob Oduor et al (2017)

Domestic studies on the impact of equity on the financial stability of commercial banks include Vũ Thị Hồng (2015), Lê Thanh Ngọc and partner (2015), Hoàng Công Gia Khánh and Trần Hùng Sơn (2015), Nguyễn Minh Hà & Nguyễn

of commercial banks is the study by Björn Imbierowicz and Christian Rauch (2014)

CHAPTER 3: METHODOLOGY AND RESEARCH DATA

3.1 Research process

Diagram 1: Research Process

3.2 Research Methods

3.2.1 Measure the financial stability of commercial banks

Inheritance of the Z-score calculation method for the banks of Boyd & Graham (1986), Hannan & Hanweck (1988), Boyd & partner (1993), this study calculates the Z-score for Banks are as follows:

𝑍𝑠𝑐𝑜𝑟𝑒𝑖𝑡 = 𝑅𝑂𝐴𝑖𝑡+ 𝐸𝑄𝑇𝐴𝑖𝑡

𝛿𝑅𝑂𝐴𝑖𝑝

𝑍𝑠𝑐𝑜𝑟𝑒𝑖𝑡 is the Z-score measures the bank's financial volatility in year t

𝑅𝑂𝐴𝑖𝑡 is the return on total assets of bank i in year t, calculated as the after-tax profit divided by total assets

𝐸𝑄𝑇𝐴𝑖𝑡 is the ratio of equity to total assets of bank i in year t, calculated by the average equity divided by the total average assets

𝛿𝑅𝑂𝐴𝑖𝑝 is the standard deviation of the bank's ROA during the study period p

3.2.2 Model and hypothesis

3.2.2.1 Research models

Based on the study by Jacob Oduor et al (2017), the authors use models demonstrating the impact of equity on the financial stability of Vietnamese commercial banks under different research conditions Specific research models are as follows:

ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐸𝑄𝑇𝐴𝑖,𝑡 + 𝛽2𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽3𝐿𝑇𝐷𝑖,𝑡 + 𝛽4𝑅𝑂𝐸𝑖,𝑡+

𝛽 𝐶𝑅𝐸𝑖,𝑡+ 𝛽6𝐺𝐷𝑃𝑖,𝑡 + 𝛽7𝐼𝑁𝐹𝑖,𝑡 + 𝜖𝑖 (1) ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐸𝑄𝑇𝐴𝑖,𝑡 + 𝛽2𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽3𝐿𝑇𝐷𝑖,𝑡 + 𝛽4𝑅𝑂𝐸𝑖,𝑡+

𝛽 𝐶𝑅𝐸𝑖,𝑡 + 𝛽6𝐺𝐷𝑃𝑖,𝑡 + 𝛽7𝐼𝑁𝐹𝑖,𝑡 + 𝛽8𝐸𝑄𝑇𝐴2𝑖,𝑡+ 𝜖𝑖 (2) ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐸𝑄𝑇𝐴𝑖,𝑡 + 𝛽2𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡 + 𝛽3𝐿𝑇𝐷𝑖,𝑡 +

𝛽4𝑅𝑂𝐸𝑖,𝑡 + 𝛽 𝐶𝑅𝐸𝑖,𝑡+ 𝛽6𝐺𝐷𝑃𝑖,𝑡+ 𝛽7𝐼𝑁𝐹𝑖,𝑡+ 𝛽8𝐾𝐻𝑈𝑁𝐺𝐻𝑂𝐴𝑁𝐺𝑖,𝑡+ 𝜖𝑖 (3) ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡+ 𝛽2𝐿𝐿𝑃𝑖,𝑡 + 𝛽3𝐿𝑂𝐴𝑁𝑇𝐴𝑖,𝑡+ 𝛽4𝐶𝐼𝑅𝑖,𝑡+

𝛽 𝑅𝑂𝐸𝑖,𝑡 + 𝛽6𝐺𝐷𝑃𝑖,𝑡+ 𝛽7𝑁𝑃𝐿𝑖,𝑡+ 𝛽8𝐼𝑁𝐹𝑖,𝑡+ 𝜖𝑖 (4) ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡+ 𝛽2𝐿𝐿𝑃𝑖,𝑡 + 𝛽3𝐿𝑂𝐴𝑁𝑇𝐴𝑖,𝑡+ 𝛽4𝐶𝐼𝑅𝑖,𝑡+

𝛽 𝑅𝑂𝐸𝑖,𝑡+ 𝛽6𝐺𝐷𝑃𝑖,𝑡 + 𝛽7𝑁𝑃𝐿𝑖,𝑡 + 𝛽8𝐾𝐻𝑈𝑁𝐺𝐻𝑂𝐴𝑁𝐺 + 𝛽9𝐼𝑁𝐹𝑖,𝑡 + 𝜖𝑖 (5) ln𝑍𝑠𝑐𝑜𝑟𝑒𝑖,𝑡 = 𝛽0+ 𝛽1𝐵𝐴𝑁𝐾𝑆𝐼𝑍𝐸𝑖,𝑡+ 𝛽2𝐿𝐿𝑃𝑖,𝑡+ 𝛽3𝐿𝑂𝐴𝑁𝑇𝐴𝑖,𝑡 +

𝛽4𝐶𝐼𝑅𝑖,𝑡+ 𝛽 𝑅𝑂𝐸𝑖,𝑡 + 𝛽6𝐺𝐷𝑃𝑖,𝑡+ 𝛽7𝑁𝑃𝐿𝑖,𝑡 + 𝛽8𝑁𝑃𝐿𝑖,𝑡 × 𝐾𝐻𝑈𝑁𝐺𝐻𝑂𝐴𝑁𝐺 +

𝛽9𝐼𝑁𝐹𝑖,𝑡 + 𝜖𝑖 (6)

Table 3.1 Synthesis of variables in the research model

Expectations about accents Dependent variable

The size of the

CIR3.2 Operating expenses