Impact of Circular 17/2022/TT-NHNN on Vietnamese Commercial Banks

This thesis investigates the differential post-policy response of Vietnamese joint-stock commercial banks to Circular 17/2022/TT-NHNN, which mandates formal environmental risk management frameworks in credit extension. Employing a continuous-intensity Difference-in-Differences framework with two-way fixed effects on a quarterly bank-level panel from Q1/2019 to Q4/2025, the empirical strategy exploits predetermined cross-bank variation in lending exposure to sectors potentially covered by the regulation. Beyond the primary credit-risk outcome, the Non-Performing Loan ratio, the analysis examines potential adjustment channels encompassing credit reallocation, risk repricing, and short-run risk recognition, alongside institutional heterogeneity moderated by bank size and documented pre-policy readiness. The baseline estimation yields a negative interaction coefficient on the NPL ratio that remains statistically insignificant at conventional levels, as evaluated by both clustered standard errors and small-cluster Wild Bootstrap procedures. Similarly, the analysis does not detect statistically significant evidence of differential loan contraction, interest margin repricing, or enhanced provisioning practices among highly exposed institutions. Furthermore, triple-interaction specifications indicate that these exposure-associated responses do not systematically vary with bank size or pre-existing institutional preparedness. These findings remain broadly stable across alternative exposure metrics, sample compositions, policy-timing definitions, and controls for concurrent real-estate distress. Overall, the results provide no statistically significant evidence of a differential post-policy response associated with predetermined regulatory exposure within the examined sample and observation window.