Refinancing as a Liquidity Management Strategy: Evidence from Vietnam’s Banking Sector

Abstract

Liquidity stability is crucial for financial systems, especially in emerging economies like Vietnam, where banks often face liquidity and market fluctuations. The State Bank of Vietnam (SBV) plays a pivotal role in supporting financial institutions through refinancing mechanisms. However, there is limited research on the specific factors that influence commercial banks' decisions to seek refinancing from SBV.This study investigates the key determinants affecting refinancing demand, focusing on collateralized refinancing, cost sensitivity, and disbursement efficiency. By analyzing survey data through a binary logistic regression model, the research examines how institutional factors, regulatory frameworks, and liquidity constraints impact refinancing choices. The findings suggest that secured refinancing remains the preferred option, while interest rates and disbursement delays significantly affect banks’ willingness to utilize refinancing. Additionally, the reliance on SBV refinancing is largely due to the limited availability of alternative liquidity sources. The study highlights the necessity for more adaptable refinancing policies, streamlined disbursement processes, and expanded collateral eligibility to enhance financial sector resilience. These insights contribute to monetary policy development and offer practical recommendations for improving SBV’s refinancing effectiveness.