Vietnamese Commercial Banks Research Articles

The Impact of Auditor Specialization and Banks’ Listing Status on Earnings Management in Vietnamese Commercial Banks

Abstract This study investigates the impact of auditor specialization and listing status on earnings management in Vietnamese commercial banks. Discretionary loan loss provisions (LLP) is used as a proxy for earnings management. Based on a sample of 21 banks in the period 2008–2017, the findings show that: First, auditor specialization does not have a significant impact on constraining earnings management in the banks. Second, listed banks engage more in earnings management. In addition, listed banks report more income-increasing LLP, while non-listed banks report more income-decreasing LLP. The results are consistent with a number of prior studies that find no evidence of specialist auditors curtailing earnings management, and listed firms participating more in managing income. The results have important implications for government authorities in improving the legal framework over the preparation of banks’ financial statements, including revision of the accounting standards and alignment of the accounting standards with other banking regulations.

Income diversification and cost-efficiency of Vietnamese banks

PurposeThe study examines the impact of income diversification on cost efficiency of Vietnamese commercial banks over the period 2005–2017.Design/methodology/approachIncome diversification indicators are designed based on measures of diversifying loan portfolio. Besides the traditional model, we use the Fractional Regression to estimate the model with dependent variables defined on the unit interval.FindingsThrough the two-stage DEA analysis, we find that the income diversification has a positive impact on the cost efficiency of banks. In addition, this impact is stronger for unlisted banks and in the phase of banking system ongoing restructuring.Originality/valueThe use of a variety of income diversification measures and estimation methods for models with bounded dependent variable has provided a reliable empirical evidence of the advantages of implementing a strategy on structural diversity of both interest and non-interest income in the emerging banking markets such as Vietnam.

The Impact of Balanced Scorecard on Performance: The Caseof Vietnamese Commercial Banks

Balanced Scorecard (BSC) is one of basic contents of managerial accounting. Balanced Scorecard (BSC) will help the manager to measure and evaluate the operating performance in enterprises. Therefore, providing the theory base as well as in fact with regards to apply with Balanced Scorecard, impact of applying with Balanced Scorecard on the performance of company, from then providing for the managers with the base to promote on applying the Balanced Scorecard in Vietnamese Enterprises aimed to improve the operating performance of enterprises meaningfully and neccessary. However, balanced scorecard in general is a very new content in both theoretical and practice in Viet Nam. The study aims to explore the application with Balanced Scorecard in enterprises according to 4 perspective of Balanced Scorecard in Vietnamese commercial banks. In the dimension of this paper, SPSS 22 was used to collect and analysis data, basing on the results of 109 questionnaires of managers and head of department from Vietnamese commercial banks. Research have shown impact of Balanced Scorecard on the performance of Vietnamese commercial banks. This is the scientific basis for enterprises of Vietnam in general and Vietnamese commercial banks firms in particular have a successful application of balanced scorecard to improve the business performance.

Concentration and performance in Vietnamese commercial banks

Concentration and performance in Vietnamese commercial banks

Technical Efficiency of Vietnamese Commercial Banks

The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.

The risk-return trade-off of liquidity positions: Evidence from Vietnamese banking system

The study investigates how liquidity positions affect bank performance at Vietnamese commercial banks for the period of 2007-2017, in terms of credit risk and profitability. We employ the generalised method of moments (GMM) for the dynamic panel models to implement some alternative regression techniques. The robust results indicate that the liquidity position induces a trade-off between risk and return. More precisely, banks holding more liquid assets tend to face less credit risks but yield less profits. These effects seem not to be strong and we also examine if the effect of liquidity on bank return exerts an increasingly downward slope depending on bank riskiness, but there is no significant evidence found. The findings of this study provide some insightful policy implications for banking market in Vietnam as well as other emerging countries.

Determinants influencing capital adequacy ratio of Vietnamese commercial banks

Determinants influencing capital adequacy ratio of Vietnamese commercial banks

Performance of Vietnamese commercial banks in ASEAN Economic Community

In this study, the author assesses and compares the performance of commercial banks in Vietnam and ASEAN countries in the period of 2013-2017 by using parametric approach, using SFA method (Stochastic Frontier Analysis). The results showed that the average efficiency of ASEAN commercial banks in the study period was 0.77, the lowest efficiency was 0.11, the highest efficiency was 0.96. This result also shows that the efficiency of ASEAN commercial banks in the period of 2013 - 2017 is relatively low, with this result if the average output does not change, commercial banks can save as much as possible. 23% of the input. The results also show that the average efficiency of Brunie commercial banks is the highest at 0.87%, ranked second is Thai1and with average technical efficiency of 0.83. Ranked last among the 9 ASEAN commercial banking systems in the research period is Singapore commercial banks with average technical efficiency of 0.72 above are Lao commercial banks with an efficiency of 0.73. Vietnam's commercial banking system with technical efficiency in the research period was 0.75, ranked 6th among 9 ASEAN countries.

ОЦЕНКА КОНКУРЕНТОСПОСОБНОСТИ БАНКОВСКОЙ СИСТЕМЫ ВЬЕТНАМА В УСЛОВИЯХ ФИНАНСОВОЙ ГЛОБАЛИЗИЦИИ

In the context of financial globalization, commercial banks have to face fierce competitions from domestic and foreign banks. This requires Vietnamese banking system to actively prepare to participate in the integration and competition process. The article assesses the competitiveness of Vietnamese commercial banks in the modern period, and at the same time gives recommendations to improve the competitive abilities of the banking system to maintain the existing market share and developing new markets strategies.

The impact of income diversification on liquidity creation and financial performance of Vietnamese Commercial Banks

The impact of income diversification on liquidity creation and financial performance of Vietnamese Commercial Banks

Factors Affecting the Level of Bank Competition: Empirical Evidence in Vietnamese Commercial Banks

Purpose: There is increasing interest in the trends and requirements associated with improvement in the competition of commercial banks. Many studies have been conducted on this topic in Vietnam as well as in the rest of the world. In the present study, the factors affecting the level of competition in the banking system in Vietnam have been studied. Design/Methodology/Approach: We employ the Bayesian Multilevel Generalized Linear Model to identify the factors affecting the level of competition in the banking system in Vietnam. Findings: The findings show that the eight variables that affect the level of competition in Vietnam commercial banks were identified, including previous-year competition, equity on total assets ratio, loans on total assets ratio, operating expense on the operating income ratio, return on equity, bank size, economic growth, and inflation rate. Moreover, the results demonstrated that during the 2008–2009 crisis, there was a positive relationship between the crisis and the Lerner index. Practical Implications: Based on the research results, we provide policy implications to improve the competitive status of commercial banks in Vietnam. Originality/Value: The results of the present study would serve as a basis for assisting the policy-makers and the other stakeholders to better understand the current state of bank competition and the factors affecting the level of bank competition, which would assist them in formulating strategies and solutions to improve bank competition in Vietnam.

Applying SFA and DEA in Measuring Banks Cost Efficiency in Relation to Lending Activities: The Case of Vietnamese Commercial Banks

Applying SFA and DEA in Measuring Banks Cost Efficiency in Relation to Lending Activities: The Case of Vietnamese Commercial Banks

Revenue Diversification, Risk and Bank Performance of Vietnamese Commercial Banks

In the future, when the process of economic integration in the banking sector is more powerful, and competitive, diversifying revenue is an inevitable and objective trend to help the banks increase profits, minimize risks and improve their competitive position in the system. The research is on the relationship between revenue diversification, risk and bank performance using data from audited financial statements and annual reports of 26 commercial banks listed and unlisted in Vietnam during the period 2010–2018. The research method uses Generalized Method of Moment (GMM) modeling techniques to solve endogenous problems, variance and autocorrelation in the research model. Research results show that diversification negatively impacts profitability and the higher the diversification, the higher the risk of commercial banks. However, the more diversified listed banks, the more increased the bank’s stability. The banks show the weakness and lack of experience of the banking system in developing a reasonable profit transformation model. The revenue diversification of banks is currently passive and moves slowly. Interest income is still the motivation of bank development, boosting profit growth. Growth, as well as the contribution from service activities, is not commensurate with potentials; although there are many positive points, they are not enough to cover risks from net interest income activities.

The Determinants impacts on the profitability of the Vietnamese Commercial Banks in the periods of 2010 to 2017

The study location only resides in Vietnam with a focused group of all 28 commercial banks in Vietnam. The main source of statistics for this testing will come and be collected directly from the financial statement of all financial institutions for 2010 and 2017. In term of panel data analysis, this should require for the Hausman test in term of differentiation between fixed effects model and random effects model (Sheytanova, 2015). This should ensure the accuracy of the test result in term of the hypothesis testing’s power and size as well as in term of obtaining the consistent result.
 
 The result will be conducted in term of for each dependent variables and one for collaboration of all dependent variables. For the purpose of the T-test results, we will have to look at the t-statistic, t-distribution and degrees of freedom to determine a p-value (probability) which can also be utilized to determine whether the population means differ. The result expects to have the size of the bank indicating no influence but all other dependent variables shall have impacts on the profitability of the bank in term of financial performance.
 
 For the purpose of this thesis, the ultimate problem to be addressed and examined in term of the development of financial institutions in Vietnam for the fiscal year of 2010 and 2017. The element of financial data will be able to add and accompany the ultimate purpose of this thesis. The determination and factors contributing to the profitability of all commercial bank in Vietnam for the course of the year from 2010 to 2017 will be assessed and review in this thesis. After the analysing main determinants of banks’ profitability in Vietnam’s 28 commercial banks that we can conclude that the empirical findings are consistent with the expected results from the T-test above. The result expects to have the internal and external factors of credit and liquidity risk, management efficiency, the market concentration as well as competition and the local economic growth of all commercial banks reflecting in their and return of asset for profitability ratio. As a policy recommendation for management and authorities of the banks, I propose an enhancement in term of supervision for credit and liquidity risk of banks (especially in term of implementation of Basel II) and the inspiring of banking competition and introduction of the products. For banks’ management level of decision making, I also indorse to monitor the credit and liquidity risk indicators, to expand the sources of revenues and to improve costs from operations perspectives. The limitation will be on the secondary source of data as well as the selection of determinants being on the previous studies and works of literature but no in the Vietnam market. As a future direction of research, I intend to deepen the analysis by extending the period as well as expanding the comparison to other developing countries in the region.

The impact of multimarket contacts on bank stability in Vietnam

PurposeThe purpose of this study is to investigate the impact of multimarket contacts on bank stability in the Vietnamese banking system between 2006 and 2015.Design/methodology/approachThe system generalized method of moments proposed by Arellano and Bover (1995) is used to examine the relationship between multimarket contacts and bank stability.FindingsThe findings show that multimarket contacts among Vietnamese commercial banks improve bank stability. In addition, more x-efficient banks appear to be more stable. The same is true for banks with less holding liquid assets, for those with less excessive lending, for smaller banks, for those with the greater level of intermediation and for those with a higher level of foreign ownership. Listed banks are found to be less-risk taking than unlisted banks.Originality/valueThis study is the first attempt to examine the relationship between multimarket contacts and bank stability in an emerging market in the Asia-Pacific region.

Vietnamese Commercial Banks and Corporate Governance

Objective – Corporate governance is a focus of bank managers and stakeholders, especially after the financial crisis. Contributing to firm and bank difficulties is weakness in managing internally and externally, making governance critical; even more so for banks which play a central role in the economy, allocating capital, lowering risk for businesses and individuals, and ensuring stability and sustainability. Bank failures in the crisis (2008-2016) highlighted governance and risk in developed nations and in developing ones, such as Vietnam. This paper studies governance in bank performance and risk, using theoretical frameworks and empirical study. Methodology – Fundamental governance is reviewed, for banks in particular, in two widely used frameworks. Prior research relates bank performance (share return and return on assets, ROA), risk (capital adequacy ratio, CAR) and governance (board size, BS; number of committees, NC; independent directors to total, NID). Findings – As our models show, NC and NID relate positively to bank performance. CAR has a positive link to governance. Novelty – Our recommendation is that banks in Vietnam must have effective boards to boost performance. Type of Paper: Empirical. Keywords: governance; banking; crises; Vietnam; performance Reference to this paper should be made as follows: E. Bace. 2019. Vietnamese Commercial Banks and Corporate Governance, J. Fin. Bank. Review 4 (2): 73–81 https://doi.org/10.35609/jfbr.2019.4.2(4) JEL Classification: M14; D21; G21; G34

Impact of Capital on Profitability of Banks: Evidence from Vietnamese Commercial Banks

Impact of Capital on Profitability of Banks: Evidence from Vietnamese Commercial Banks

Risk Management at Military Commercial Joint Stock Bank in Vietnam

This research is conducted for examining the framework for risk management in the Basel II accord, the Basel II risk management model at the Military Commercial Joint Stock Bank. Data were collected from annual reports for the period from 2015 to 2017 of the Military Commercial Joint Stock Bank. The results show that the implementation of risk management under Basel II at Military Bank still faces many difficulties in the pressure of capital increase, database system, human resource quality, and cost of implementation. The study suggest some solutions for Military Bank to implement successfully Basel II, emphasizing the role of human resource quality, modernizing the data system and the specific mechanism for raising capital. The results of this research is a reference for Vietnamese commercial banks in identifying, controlling and responding various risks in banking activities in the context of Vietnam. Keywords: Basel II, Risk management, Military Bank DOI : 10.7176/RJFA/10-12-06 Publication date :June 30 th 2019

Should Vietnamese Banks Need More Equity? Evidence on Risk-Return Trade-Off in Dynamic Models of Banking

This study employs generalized method of moments (GMM) for dynamic panel data models to deal with the nature of banking behaviour, aiming at investigating the impact of bank equity on the risk and return of Vietnamese commercial banks during the period of 2006–2017. The study finds that increasing bank equity is not always the best strategy to be accompanied by absolute benefits, increasing returns and reducing risks for banks but is a trade-off instead. More precisely, banks with larger capital buffers tend to take less risk but are less profitable. In addition, the study also finds a non-linear relationship revealing that bank risk mitigates the effect of bank equity on profitability. Most estimations show strong robustness checked by some alternative techniques. Based on the findings, the study provides some important policy implications to improve the performance of the banking system in Vietnam as well as in other emerging countries.

The central role of customer dialogue and trust in gaining bank loyalty: an extended SWICS model

Purpose The purpose of this paper is to expand the Swiss Index of Customer Satisfaction (SWICS) model by investigating the role of customer dialogue in the interrelationships among customer satisfaction, customer trust, perceived value and customer loyalty upon Vietnam banking industry. Design/methodology/approach The conceptual framework was developed from both an exploratory research with focus group method and the literature. A structural equation model linking customer dialogue to customer satisfaction, customer trust, perceived value and loyalty is tested using data from a sample of 389 Vietnamese individual bank customers. Findings The results indicate the key role of customer dialogue in bank marketing since it not only has an independent impact on customer loyalty but also mediates the effect of customer satisfaction on loyalty completely and the relationship between customer trust and loyalty partially. Besides, the central role of customer trust was also highlighted since it mediates totally the effect of perceived value on both of customer dialogue and customer loyalty while explaining partially the path from customer satisfaction and customer dialogue. Research limitations/implications First, regarding sample size, the authors have used suitable sampling methods with adequate sample representation. However, a larger sample size with more diverse age range and usage of various banking services may be more helpful and effective for the path analysis and managerial implication. Second, the authors have used only a limited set of measurement items due to the concerns of model parsimony and data collection efficiency. For example, perceived value can be measured upon more detailed dimensions, and yet the author focussed only on some selected measures based mainly on their relevance to the context studied. Practical implications The findings imply that building trust and engaging with customers better through communication are keys for Vietnamese commercial banks to gain more customer loyalty in such competitive conditions. Originality/value The study is noteworthy that it adds perceived value and customer trust in the SWICS model and investigates the interrelationships between all variables in a single model.