Profitability of Vietnamese Banks Under Competitive Pressure

Abstract

ABSTRACTThe recent banking reforms in Vietnam have had a considerable impact on the earnings of banks. The paper aims to investigate the impact of competition on profitability of Vietnamese banks over the period 2006–2016. The research selects both Lerner index and Adjusted Lerner index to measure competition and rates of return to measure bank profitability. Through the two-step GMM system estimator, the findings show that there is a practical non-linear relationship between competition and banks profit in Vietnam. In addition, the findings show bank profitability is impacted by other determinants and especially by the entry of foreign banks.