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Bank-Specific Factors Influencing the Profitability of Listed Commercial Banks in Vietnam

Author

Listed:
  • Dao Thi, Huong

    (Thuyloi University)

  • Nguyen, Theanh

    (Academy Of Finance)

Abstract

This research examines the impact of bank-specific financial factors on the Return on Average Assets (ROAA) of commercial banks in Vietnam. The results indicate that Off-Balance Sheet activities (OBS), Net Interest Margin (NIM), and Bank Size (SIZE) positively influence ROAA. OBS presents profit generation opportunities contingent on careful risk management. A higher NIM reflects profitability from the interest rate spread, while a larger bank size enables diversification of operations and risk reduction. Conversely, Credit Balance (CB) negatively impacts ROAA as increased credit exposure can lead to credit risk and reduced profitability. Factors such as the Cost-to-Income Ratio (CIR), Non-Performing Loan ratio (NPL), and Loan Loss Reserves (LLR) do not significantly affect ROAA. The article emphasizes the importance of credit risk and market risk management to ensure the long-term sustainability and growth of commercial banks in Vietnam. Future research directions could focus on further exploring management and organizational factors, the impact of financial technology on financial performance, and the influence of customer behavior on bank profitability. Additionally, studies could consider macroeconomic factors such as global economic fluctuations and monetary policy to better understand the financial environment and support banks in developing more sustainable growth strategies.

Suggested Citation

  • Dao Thi, Huong & Nguyen, Theanh, 2024. "Bank-Specific Factors Influencing the Profitability of Listed Commercial Banks in Vietnam," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 16(2), pages 469-488, July.
    • Handle: RePEc:col:000443:021240
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    References listed on IDEAS

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    More about this item

    Keywords

    finance; profitability; commercial bank; return on average assets; Vietnam.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other

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