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The Impact of Asset-Liability Management on the Profitability of Listed Commercial Banks in Vietnam

Author

Listed:
  • Nguyen Thi Thu Trang

    (Banking Academy of Vietnam, Hanoi, Vietnam)

  • Nguyen Thuy Duong

    (Banking Academy of Vietnam, Hanoi, Vietnam)

  • Pham Ngoc Binh

    (Banking Academy of Vietnam, Hanoi, Vietnam)

Abstract

This paper investigates the effect of asset-liability management on the profitability of listed commercial banks in Vietnam, analyzing annual data from 2013 to 2023. The study uses VIF tests, Heteroskedasticity tests, Model Specification tests, and the Generalized Least Squares (GLS) model with the Modified Wald test to examine the data. The results reveal a positive correlation between bank asset management and annual GDP growth with profitability. Conversely, liability management and the year-on-year growth rate of total assets negatively impact profitability. Specifically, factors such as loans and advances, investments in securities on the asset side, and deposits and borrowings from other credit institutions, along with customer deposits on the liability side, are significant. Lending activities, in particular, are identified as key drivers of financial performance in the Vietnamese banking sector. However, the minimal impact of investment securities on profitability raises questions, given their traditionally significant role in banking profitability strategies globally. The study also highlights the negative effects of certain liabilities on bank profitability, stressing the need for careful liability management for banks in Vietnam. While GDP growth is generally linked with economic prosperity and financial sector growth, its impact on bank profitability in Vietnam appears limited, suggesting that other factors might play a more significant role.

Suggested Citation

  • Nguyen Thi Thu Trang & Nguyen Thuy Duong & Pham Ngoc Binh, 2024. "The Impact of Asset-Liability Management on the Profitability of Listed Commercial Banks in Vietnam," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 369-378, October.
  • Handle: RePEc:eco:journ1:2024-06-40
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    References listed on IDEAS

    as
    1. Khanh Ngoc Nguyen, 2019. "Revenue Diversification, Risk and Bank Performance of Vietnamese Commercial Banks," JRFM, MDPI, vol. 12(3), pages 1-21, August.
    2. Arzu Tektas & E. Nur Ozkan‐Gunay & Gokhan Gunay, 2005. "Asset and liability management in financial crisis," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 6(2), pages 135-149, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Asset-Liability Management; Profitability; Commercial Banks; Vietnam;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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