Non-performing loans has always been a serious concern for the banking system in Vietnam over the years, especially after the financial crisis year 2008. The huge volume of non-performing loans may lead to severe consequences for the whole economy at both macroeconomic and microeconomic level. The determinants of the NPLs problems are identified by building up models that explain non-performing loans by macroeconomic factors and bank-specific factors which are adjusted from the earlier studies to fit with the context in Vietnam. In short, the level of NPLs is primarily contributed by bank-specific factors. Also, it is recommended that banks should improve lending policies to prevent the increase in non-performing loans. Last but not least, it is urgent for the State Bank of Vietnam in general and banks themselves in particular to conduct a strict procedure in implementation, control, management, and supervision of all activities in order to carry out solutions in time before the problems are getting worse.
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