This paper aims at investigating the impact of non-performing loans on the ability to make profit of Vietnamese commercial banks in the period of 2008 to 2017 and draws a conclusion as well as recommendations to mitigate the risk. | The effect of non-performing loans on profitability of commercial banks Case of Vietnam Accounting 6 2020 373 386 Contents lists available at GrowingScience Accounting homepage ac The effect of non-performing loans on profitability of commercial banks Case of Vietnam Hoai Linh Doa Thanh Xuan Ngoa and Quoc Anh Phunga aNational Economics University Vietnam CHRONICLE ABSTRACT Article history Profit always be the top priority of banking operation over the years. Commercial banks maximize the net interest Received November 26 2019 margin by charging more interests to the borrowers and offering lower interests to the depositors. Their aggressive Received in revised format lending strategies can sometimes result in credit risk moral hazard and non-performing loans. Some studies found November 28 2019 that non-performing loans have negative impact on the bank s profitability some argued otherwise. This paper Accepted January 2 2020 aims at investigating the impact of non-performing loans on the ability to make profit of Vietnamese commercial Available online banks in the period of 2008 to 2017 and draws a conclusion as well as recommendations to mitigate the risk. January 5 2020 Keywords Non-performing loans Profitability Commercial bank 2020 by the authors licensee Growing Science Canada 1. Introduction Vietnamese banking sector includes of 42 licensed commercial banks and the total assets of up to billion VND SBV 2017 . Such tremendous amount of assets and so many institutions provide Vietnam with a very good mobilization in financial resources for the growth by spreading credits to local and foreign businesses. Bank like other business is considered successful mostly based on the profit and the quality of assets. Some main criteria of a business performance are often related to the asset quality the progress rate or price behavior. However these elements only test the desirability of the profit system. Within the system itself .
