Profitable Investment Channels of Vietnamese Commercial Banks (2018–2024)

The Law on Credit Institutions 2010, amended and supplemented, was applied on 15 January 2018, causing many changes in senior personnel in Vietnamese banking. The period (2018–2014) had many changes. This was also a period of many business difficulties. Four commercial banks had to carry out mandatory transfers at the request of the State Bank to ensure the development of the Vietnamese banking system in 2024. Profitable investment channels of commercial banks sometimes generate income and, at other times, suffer losses. Managers often analyze and make investment decisions by observing developments recorded on graphs and estimating the future fluctuation trends of each profitable investment channel. However, no research has been conducted on how the simultaneous implementation of all information from investment channels affects the final profit results of commercial banks. This study investigates all banking activities, from trading to investing, to consider which investment channel has a stable impact on bank profits over a long period. The S-GMM estimation method is used, due to the consideration of endogenous variables in quarterly panel data of 27 Vietnamese commercial banks from the first quarter of 2018 to the third quarter of 2024. This study provides statistical evidence indicating that all investment channels of commercial banks contribute to increased profits, except for short-term securities trading channels and capital contributions to subsidiaries. This study also reveals that economic growth and systemic risk affect commercial bank profits. Several solutions are proposed for commercial banks to develop future profitable investment channels.