Banking System In Vietnam Research Articles

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.

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 determinants of liquidity risk of commercial banks in Vietnam

This research identifies factors that explain the liquidity of commercial banks in the Vietnam banking system from 2010 to 2015. Using the OLS regression method for analysis, it was found that: the interbank market helps commercial banks improve their liquidity; the larger the loan size, the higher the liquidity risk; good credit risk management has a positive impact on liquidity risk management; and long-term interest rate is negatively related to the liquidity of commercial banks. The research also makes recommendations on liquidity risk management policies to banks and policy-makers from the Government and the State Bank of Vietnam.

Cross-Border Banking Services and Determinants of Bank Selection from Corporate Customer’s Perspective: Evidence from Vietnam

This paper focuses on assessment of cross-border services in the Vietnam banking system in the context of international integration from customer’s perspective. The authors used Exploratory Factor Analysis (EFA) in SPSS from survey of 153 corporate clients of Vietnamese banks in 2018 to evaluate the current situation of offering cross-border services as well as competitiveness of banking system in Vietnam. Research results show that from customers’ perspective three key factors relating to marketing policy, infrastructure and financial capacity of banks are the most important factors in selection of using cross-border banking services in Vietnam. Survey results show that competitiveness of Vietnamese banks is reaching medium level but much lower than the expectation of customers. Therefore, the authors propose to Vietnam banking system some recommendations including: (i) Improving the services’ quality, especially in terms of technology and depth of cross-border banking services; (ii) Focusing more on customer care activities by developing more useful applications on smartphones, tablets and computers, create the linkage among banks and end-users, develop digital marketing instead of traditional marketing methods; (iii) Maintaining domestic market as well as finding new markets abroad, especially in the ASEAN countries, in order to gradually increase the diversification as well as the quality of cross-border financial and banking services.

Globalisation and Bank Performance in Vietnam

The purpose of this study is to shed some crucial light on the relationship between globalisation and profitability of the banking system in Vietnam. We use a range of bank-characteristic determinants, country-specific factors and three different dimensions of globalisation including economic globalisation, social globalisation and political globalisation to explain bank performance. Using the random effect model based on secondary data for commercial banks in Vietnam from 2007-2014, we find evidence that the actual flow index and the restriction index have significant and positive effects on bank profitability, while the cultural proximity and political indexes show significant and negative impacts. Therefore, Vietnamese banking regulators should widen the openness of the banking sector to attract more foreign investors and improve global competitiveness. Banks are also recommended to develop their credit risk management, diversify products and services, expand their network along with enhancing management practices, and improve forecasting of macroeconomic fluctuations in order to achieve greater efficiency levels.

Vietnamese Commercial Banks in Global Integration Context: Opportunities, Challenges and Recommendations

In the context of integration, Vietnam has held increasing attraction for investors in many fields including that of providing financial services from Vietnamese commercial banks. Therefore, the commercial banking system needs to be prepared for competition as the number of foreign banks investing in Vietnam is on the rise. In particular, with the implementation of the international commitments in the financial sector, the commercial banking system in Vietnam will have a lot of opportunities as well as challenges. The purpose of this study is to propose opportunities, challenges and some recommendations for sustainable development of the commercial banking system in Vietnam.

Effects of the Credit Boom on the Soundness of Vietnamese Commercial Banks

This paper concentrates on examining the impact of the credit boom (2007-2010) on the soundness of the commercial banking system in Vietnam by using qualitative and quantitative methods. The results show that the credit boom in the period 2007-2010 had made Vietnam's banking system face many uncertainties such as difficulties in liquidity, increased non-performing loans... The influence of the credit boom on Vietnam's banking system is assessed on basic aspects such as asset quality, profitability, liquidity, capital adequacy... The quantitative analysis of the impact is made through the regression model using variables that show the characteristic of individual commercial bank and the volatility of the economy. The data is collected from 18 commercial banks in Vietnam in the period from 2005 to 2013, taken from the database BankScope and supplemented by information from the annual financial reports of the banks. Finally, in order to avoid the possibility of credit booms in the future and their effects on bank soundness in Vietnam, some recommendations related to credit growth are proposed for the authorities and the commercial banks.

Impact of Ownership Structure and Bank Performance – An Empirical Test in Vietnamese Banks

By using the data collected from the whole 44 banks in the banking system in Vietnam from 2010-2012, the authors try to investigate the impacts of ownership structure on bank performance in Vietnamese banking system. Research results show that capital concentration and private ownership have positive impact on bank profitablity, the nonperforming loan ratio has negative relation with banks’ profitability. Besides, the research results are also consistent with the previous researches (Nguyen, Tran & Pham, 2014) on the positive correlation of corporate governance and bank performance in Vietnam. The findings in this paper are also relevant with the previous researches in Kenya, China, Malaysia (Wen, 2010, Rokwaro, 2013). From these findings, some policy implications are also suggested as follow: (i) encourage the large shareholders participation the Board of Director to reduce the interest conflict in banks, (ii) enhance private ownership to increase bank profitability, (iii) improve the corporate governance of banks under international standards, and (iv) push-up the solving of non-performing loans in the bank restructuring in Vietnam.

Cluster Analysis of Vietnamese Banks

The recent global credit and liquidity crisis have underscored the importance of systemic risk, especially in the banking system, which is the risk of the failure of the financial system caused by the default of one banking institution. The challenging environment has weakened Vietnamese banking sector, thus, there exists a worry about bank sector catastrophe. To prevent the domino-like bank failures, identifying and grouping banks and especially grouping problem banks are highlighted in this paper. Specifically, cluster analysis, a classification technique, is run on the sample of 33 commercial banks to test the ability of cluster analysis to recognize vulnerable banks before they break down, as well as find out which characteristics they have in common. Twelve financial ratios are finally selected as variables for classification purpose. Some warning indicators can also be found from the results. Starting from theoretical framework related to systemic risk and cluster analysis, then mentioning some relevant researches in the past, the paper concludes with a summary of findings and recommendation for implication of cluster analysis for restructuring Vietnam banking system.

Analysis of Factors Affecting the Operating Efficiency of Viet Nam Commercial Banking System

The paper examines factors affecting the performance of the commercial banking system in Vietnam during the period of integration from 2005 to 2012 by the method SFA (Stochastic Frontier Panel Data). The results showed that the performance of commercial banks could be affected by two main groups of factors. The group of subjective factors includes: market share, liquidity risk, proportion of foreign investors and bank size. The one of objective factors includes: gross domestic products and inflation of the economy. Factors that impact positively on the performance of commercial banks were: proportion of foreign investors, bank size and market share.

Corporate Governance Practices - Casestudies of Vietnamese Banks

While corporate governance in Vietnam banking system has been one of the major concerns of all market participants, researches in this area are limited. Actual practices of the responsibilities of board of directors in the two selected banks are evaluated against OECD and Basel principles of corporate governance in this research. It is found that there is a significant gap between actual practices of the role of the board of directors and the international principles. There is also a noticeable deviation of actual practices of the role of board from the Vietnam central bank regulation. Lack of independence in the board, role of controlling shareholders and close relationships among a group of directors are found in the analysis. From qualitative analysis, there is a noticeable difference in the efficiency between the bank with better corporate governance and the other. This paper is constructed as follows: (i) the first session focuses on the introduction of the rational of the research, (ii) the second session briefs the previous research on the corporate governance in international practices, (iii) the methodology of the research is presented in the third session, (iv) the following session analyzes the current practices of corporate governance of the two selected banks and (v) the final session gives some conclusions and recommendations.

The Performance of Vietnamese Banking System Under Financial Liberalization: Measurement Using DEA

Using time trend data from 1990 to 2010, the research applied the efficiency measurement and Data Envelopment Analysis approach to evaluate the performance changes of Vietnamese banking system under financial liberalization. The DEA time trend model is a fruitful approach to analyze the banking sector through macro level data while banking level data is unavailable, for example the case of Vietnamese banks before 2000. It showed that this performance is on a decreasing trend (although a slight recover was noticed in 2009-2010) and the banking system in Vietnam is currently running under three-forth of its capacity. One important reason for this decline in performance can be explained by the increasing in the financial openness level of the economy and its banking sector toward regional and global market.

The Performance of Vietnamese Banking System Under Financial Liberalization: Measurement Using DEA

Using time trend data from 1990 to 2010, the research applied the efficiency measurement and Data Envelopment Analysis approach to evaluate the performance changes of Vietnamese banking system under financial liberalization. The DEA time trend model is a fruitful approach to analyze the banking sector through macro level data while banking level data is unavailable, for example the case of Vietnamese banks before 2000. It showed that this performance is on a decreasing trend (although a slight recover was noticed in 2009-2010) and the banking system in Vietnam is currently running under three-forth of its capacity. One important reason for this decline in performance can be explained by the increasing in the financial openness level of the economy and its banking sector toward regional and global market.

Evaluating the Efficiency of Vietnamese Banking System: An Application Using Data Envelopment Analysis

Over the last twenty years in Vietnam, the financial system in general and the banking system in particular had been transferred from a monopoly system into a diversified system which allows all participants to compete fairly and effectively. Within these past years, the banking system in Vietnam did gradually developed in number of banking institutions, size of the banking sector in the economy, amount of credits for the economy, and amount of other banking services as well. Along with the development of the banking system in number, size, asset value, deposit, credit and debit account, ATM/POS, interest rates, etc. which attracted more and more customers using the banking’ services; the efficiency of the banking system also has been increasing. So far, there is still a lack of research on the efficiency of the banking sector in Vietnam over the decades. Several researches were conducted, however, due to the data limitation, these researches were just small steps at the big front gate. This paper, which focuses on evaluating the efficiency of bigger sample size of Vietnamese commercial banks in the year of 2008, tends to make a contribution to this progress. The DEA approach allows this paper to evaluate the efficiency of 22 Vietnamese commercial banks in using their inputs in 2008 (these banks were ranked top in the banking industry in Vietnam – VNR500 in 2009). After analyzing, the research comes to a conclusion that although the efficiency of these banks is averagely high, however, there is still an opportunity to improve this indicator.