Abstract
Fluctuation of stock price in commercial banks in developing countries such as Vietnam will reflect the business health of bank system and the whole economy. Good business management requires us to consider the impacts of multi macro factors on stock price, and it contributes to promoting business plan, financial risk management and economic policies for economic growth and stabilizing macroeconomic factors. The article analyzed and evaluated the impacts of seven (7) macroeconomic factors on stock price of a joint stock commercial bank Vietcombank (VCB) in Vietnam in the period of 2014-2019, both positive and negative sides. The results of quantitative research, in a seven factor model, show that the increase in GDP growth and lending rate and risk free rate has a significant effect on increasing VCB stock price with the highest impact coefficient, the second is decreasing the exchange rate, finally is a slight decrease in S&P500. This research finding and recommended policy also can be used as reference in policy for commercial bank system in many developing countries.
Highlights
Commercial bank system in Vietnam in recent years plays a key role in helping the whole economy
Vietcombank stock price is a function with 5 variables as follows: Y (VCB stock price) = f (x1, x2, x3, x4, x5, x6, x7) = ax1 + bx2 + cx3+dx4+ ex5 + fx6 + gx7 + k Where: x1: GDP growth rate (g), x2: inflation, x3: VNIndex, x4: lending rate, x5: risk free rate (Rf), x6: USD/VND rate, x7: S&P 500
Scenario 4 - regression model with 4 macro variables: Eviews presents the below results: Y = 568.4*G – 42.9*CPI + 669.8*R + 0.08* VNINDEX – 120.3, R2 = 0.97, SER = 3.31 We find out impacts of 4 macro variables, with the new factor: VNINDEX, shown in the above equation, VCB stock price (Y) has negative correlation with inflation, whereas it has positive correlation with GDP growth, lending rate (R), VNINDEX and interest rate (R)
Summary
Commercial bank system in Vietnam in recent years plays a key role in helping the whole economy. In the context that GDP growth in Vietnam was increasing during 2014-2019 (see Exibit 1 at the end of the paper) and Vietnam stock market has been growing significantly, it is necessary to evaluate impacts of selected macro economic factors on bank performance, especially bank stock price. From these analytical results, we could suggest bank and government policies to encourage and stabilize the growth of bank system and stock market in such developing countries such as Vietnam. Vietcombank (VCB) stock price, VN Index, GDP and S&P500 (2014-2019) Source: VN Stock exchange and Bureau statistics
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