Factors affecting the competitiveness of Vietnamese commercial banks, 2022

MINISTRY OF EDUCATION

AND TRAINING

STATE BANK OF VIETNAM

HOCHIMINH UNIVERSITY OF BANKING

VO THI THUY LINH

FACTORS AFFECTING THE COMPETITIVENESS

OF VIETNAMESE COMMERCIAL BANKS

BACHELOR’S DISSERTATION

SPECIALIZATION: FINANCE – BANKING

CODE: 7340201

HO CHI MINH CITY, 03/2022

MINISTRY OF EDUCATION

AND TRAINING

STATE BANK OF VIETNAM

HOCHIMINH UNIVERSITY OF BANKING

VO THI THUY LINH

FACTORS AFFECTING THE COMPETITIVENESS

OF VIETNAMESE COMMERCIAL BANKS

BACHELOR’S DISSERTATION

SPECIALIZATION: FINANCE – BANKING

CODE: 7340201

INSTRUCTOR

ASSOC. PROF. DR. DANG VAN DAN

HO CHI MINH CITY, 03/2022

ABSTRACT

The argument stems from an urgent need to strengthen the competitiveness of

joint-stock commercial banks under market economy settings, as well as the

emergence of more and more commercial banks in the Vietnamese banking system.

Male. As a result, this study used a quantitative technique with the Pooled OLS

model, Fixed Effects Model (FEM), and Random Effects Model (REM) to examine

the variables influencing the competitiveness of 28 joint-stock commercial banks in

Vietnam during a 10-year period from 2011 to 2020. (REM). The study discovered

that equity, bank size, and inflation all had a substantial and beneficial influence on

the LERNER model. The expense of the bank's credit risk provision has an opposite

effect on the LERNER model, which depicts the bank's competitiveness. The GDP

component has a negative impact on banks, although the effect is not statistically

significant. Finally, the author proposes policy recommendations for banks based on

the research findings in order to increase the competitiveness of Vietnamese

commercial banks.

Keywords: competitiveness, commercial banks, LERNER index, Vietnam.

ASSURANCE LETTER

I assure that the factors affecting the competitiveness of Vietnamese

commercial banks’ dissertation is my own report. During this research, the figures

and sources of knowledge are derived clearly and honestly from the banks' audited

consolidated financial statements. Additionally, the tests were conducted publicly

and transparently with no intervention to correct the results of regression models.

Author

Vo Thi Thuy Linh

THANK-YOU LETTER

First of all, to complete this graduation dissertation, I would like to express my

deepest gratitude to Assoc. Prof. Dr. Dang Van Dan, who wholeheartedly guided

me throughout the writing process. I would like to sincerely thank the lecturers for

imparting academic knowledge and supporting me throughout my studies.

Because of the limited time and knowledge, the dissertation cannot avoid

shortcomings, I’m looking forward to receiving comments from teachers so that the

graduation dissertation can achieve better results.

Thank you sincerely!

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TABLE OF CONTENTS

ABSTRACT .......................................................................................................3

ASSURANCE LETTER ....................................................................................4

THANK-YOU LETTER....................................................................................5

TABLE OF CONTENTS ...................................................................................6

LIST OF ABBREVIATIONS ..........................................................................10

LIST OF TABLES ...........................................................................................10

LIST OF GRAPHS...........................................................................................11

CHAPTER 1: INTRODUCTION ....................................................................12

1.1. Reasonable for research.........................................................................12

1.2 Research objectives................................................................................13

1.3 Research questions.................................................................................13

1.4 Research subjects and scope...................................................................14

1.5 Research methodology ...........................................................................14

1.6 Research empirical significance.............................................................15

1.7 Research layout ......................................................................................15

CHAPTER 2. LITERATURE REVIEW..........................................................17

2.1 Theory of the competitiveness of commercial banks.............................17

2.1.1 Commercial banks...........................................................................17

2.1.2 Banks’ competitiveness...................................................................17

2.1.3 The criteria to measure the competitiveness of the bank ................18

2.2 Previous studies about factors affecting the competitiveness of

commercial banks..................................................................................................19

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2.2.1 External factors................................................................................20

2.2.2 Internal factors.................................................................................21

CONCLUSION CHAPTER 2 ..........................................................................24

CHAPTER 3: RESEARCH METHODOLOGY..............................................25

3.1. Table data collection .............................................................................25

3.2. Research process ...................................................................................27

3.3. Research models....................................................................................29

3.4. Variables explanation ............................................................................30

3.4.1. Dependent variable – LERNER index ...........................................31

3.4.2. Independent variables:....................................................................31

3.5. Quantitative methods.............................................................................33

3.5.1. Descriptive statistics.......................................................................33

3.5.2. Pooled Ordinary Least Squares (Pooled OLS) Model ...................33

3.5.3. Fixed Effects Model (FEM) ...........................................................34

3.5.4. Random Effects Model (REM) ......................................................34

3.5.5. Lagrangian multiplier test ..............................................................34

3.5.6. Hausman test ..................................................................................35

CONCLUSION CHAPTER 3......................................................................36

CHAPTER 4: ANALYSIS AND RESEARCH RESULTS.............................37

4.1. Descriptive statistics..............................................................................37

4.2. Correlation analysis...............................................................................39

4.3. Multicollinearity test .............................................................................39

4.4. Estimating the regression model by Pooled OLS, FEM, and REM

methods .................................................................................................................40