Firm volatility in Vietnam (2009–2018): Unpacking determinants and the interplay between province-level financial development and corruption control
Struthmann, Philipp / Yabibal M. Walle / Helmut HerwartzExternal Publications (2026)
in: Structural Change and Economic Dynamics 80, 26-40
DOI: https://doi.org/10.1016/j.strueco.2026.06.013
Open access
Why do some firms experience more volatile growth rates than others? This paper seeks to shed light on this question using a rich data set of almost 92,000 Vietnamese firms for the period 2009–2018. Apart from firm-level characteristics, the paper examines the roles of province-level financial development, corruption control, and their interaction in explaining firm growth volatility. Our results show that there is a robust negative correlation between corruption control and firm-level volatility. Moreover, while local financial development — measured by financial depth — is generally negatively associated with volatility, the correlation between financial outreach and different measures of firm growth volatility varies. Crucially, we find a negative interaction between corruption control and local financial development, suggesting that financial development may exert a more substantial volatility-dampening effect in environments with robust corruption control, and conversely, that the effect of corruption control may be stronger in provinces with advanced level of financial development.
