September 16, 2025Open Access

Does Credit Growth Weaken Stability? Evidence and Policy Implications in Vietnam

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A significant positive shock to banking stability leads to increased credit growth over several quarters.
The impact of credit growth on banking stability, measured by Z-score, is not statistically significant in the short to medium term.
Utilizing a Panel VAR model, the study analyzes data from 29 Vietnamese banks to explore credit and stability relationship dynamics.
The findings suggest prioritizing stability-focused policies to manage credit supply without risking financial safety.

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Analysis reveals a unidirectional effect from banking stability to credit growth, highlighting the role of macroprudential policies.

Trung et al. (2025) studied this question.

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