THE RISK LEVEL OF VIETNAM NON-BANKING INVESTMENT AND FINANCIAL SERVICES INDUSTRY UNDER FINANCIAL LEVERAGE DURING AND AFTER THE GLOBAL CRISIS 2007-2011

Download This Article

Abstract

This paper estimates the impacts of external financing on market risk for the listed firms in the Viet nam non-banking financial services industry, esp. after the financial crisis 2007-2009. First, by using quantitative and analytical methods to estimate asset and equity beta of total 10 listed companies in Vietnam non-banking financial services industry with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable. Second, under 3 different scenarios of changing leverage (in 2011 financial reports, 30% up and 20% down), we recognized that the risk level, measured by equity and asset beta mean, decreases when leverage increases to 30% and vice versa. Third, by changing leverage in 3 scenarios, we recognized the dispersion of risk level increases (measured by equity beta var) if the leverage decreases down to 20%. Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance.

Keywords: Equity Beta; Financial Structure; Financial Crisis; Risk; External Financing; Investment and Financial Service Industry

How to cite this paper: Huy, D. T. N. (2013). The risk level of Vietnam non-banking investment and financial services industry under financial leverage during and after the global crisis 2007-2011. Risk Governance and Control: Financial Markets & Institutions, 3(3), 48-55. https://doi.org/10.22495/rgcv3i3art5