Determinants of Bank profitability: Evidence from 16 listed commercial banks in Vietnam, 2021

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

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PHAN THANH PHUONG ANH

DETERMINANTS OF BANK PROFITABILITY:

EVIDENCE FROM 16 LISTED COMMERCIAL BANKS

IN VIETNAM

GRADUATION THESIS

MAJOR: FINANCE & BANKING

CODE: 7340201

HO CHI MINH CITY, 2021

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY OF HO CHI MINH CITY

-----oOo-----

PHAN THANH PHUONG ANH

DETERMINANTS OF BANK PROFITABILITY:

EVIDENCE FROM 16 LISTED COMMERCIAL BANKS

IN VIETNAM

GRADUATION THESIS

MAJOR: FINANCE & BANKING

CODE: 7340201

SCIENCE INSTRUCTOR

Ph.D. DUONG THI THUY AN

HO CHI MINH CITY, 2021

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ABSTRACT

The article focuses on using the CAMEL assessment framework to assess the business

profitability of 16 commercial banks in Vietnam from 2010 to 2020 in order to evaluate

the business performance of commercial banks in Vietnam. Aims to identify the factors

influencing commercial bank profitability and to assist banks in improving their

operational and business capabilities. At the same time, because research based on the

CAMEL evaluation framework for bank profitability in Vietnam is still uncommon, the

author decided to conduct the study "Determinants of banking profitability: evidence

from 16 listed commercial banks in Vietnam" from 2010 to 2020. The author gathered

176 observed variables with 3 dependent variables and 9 independent variables using 16

commercial banks to represent the banking system in Vietnam. The article employs three

models to analyze the data. The author continues to compare the fit of the three models

with different dependent variables in order to provide the best model and improve the

feasibility of the article results. The findings indicate that the variables asset quality and

management efficiency have no effect on bank profitability.

From this, it is clear that the variables capital ratio, capital to risk weighted assets, loans

to deposit, loans to assets, bank size, annual GDP growth and inflation ratio all have a

significant impact on bank profitability. in banking operations and management. These

findings are in accordance with the data and with the findings of previous studies. Based

on the findings of this study, the author hopes that commercial banks will implement

policies to promote better business activities.

Keywords: Commercial Banks, profitability, CAMEL framework, Vietnam.

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DECLARATION

This thesis is the result of the author's own research. The article's analysis, data, statistics,

and results are entirely accurate. All of the information and materials in the article have

clear origins, are properly cited, and are allowed to be published.

The author

Phan Thanh Phuong Anh

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ACKNOWLEDGEMENTS

First and foremost, I would like to express my heartfelt gratitude to the enthusiastic

lecturers at Banking University of Ho Chi Minh City for their encouragement and

assistance in gaining important fundamental knowledge. throughout the time spent at

school studying and completing the course.

In particular, I would like to express my heartfelt gratitude to my supervisor, Ms. Duong

Thi Thuy An, who has consistently supported and guided me in order for me to complete

my graduation thesis completely.

Because of my limited practical experience, the content of my graduation thesis cannot

avoid some flaws; however, I am looking forward to receiving additional advice from

teachers in order to gain more experiences. These experiences, I believe, will be

extremely beneficial to my future development.

I sincerely thank you!

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CONTENTS

LIST OF ABBREVIATIONS........................................................................................6

LIST OF FIGURES .......................................................................................................7

LIST OF TABLES .........................................................................................................8

CHAPTER 1. INTRODUCTION...............................................................................9

1.1. Problem statement............................................................................................9

1.2. Research objectives.........................................................................................10

1.2.1. Overall objectives...................................................................................10

1.2.2. Detail objectives.....................................................................................10

1.3. Research questions .........................................................................................10

1.4. Research subjects............................................................................................11

1.5. Research scope ................................................................................................11

1.5.1. Research space .......................................................................................11

1.5.2. Research time .........................................................................................11

1.6. Research content.............................................................................................11

1.7. Methodology....................................................................................................11

1.8. Thesis structure...............................................................................................12

CHAPTER 2. VIETNAM OF BANKING SYSTEM AND LITERATURE

REVIEW 14

2.1. Vietnam’s banking system: An overview .....................................................14

2.2. Literature review ............................................................................................16

2.2.1. Theoretical review..................................................................................16