| dc.description.abstract | Banking sector has an important role in the development of financial system
and economy of Vietnam. To survive and growth, banks need profitability as the
primary concern for their business. However, in the current business environment with
lots of reforms, bank performance tends to decline and be volatile. This brings to the
need to investigate the determinants of bank profitability in the case of Vietnam.
The current literature of banking profitability is insufficient. By
incorporating empirical evidences of other researches in the world, this thesis applies
internal factors (i.e., bank size, capitalization, deposits, loans, credit risk, liquidity,
income diversification, and operating efficiency) into regression models with external
factors (i.e., GDP, inflation, and market concentration) as control variables to examine
the effects of these factors. This paper differs from other studies since it applies the
additional factors (credit risk, liquidity, income diversification, operating efficiency,
and market concentration) into Vietnamese conditions. This also modifies the credit
risk factor to be represented by non-performing loans ratio and updates the period of
study to evaluate the current situation.
This thesis uses random effects regression models in analysis of unbalanced
panel data of 35 commercial banks in Vietnam over the period 2007-2012. The results
of this thesis supports the effects of internal factors on bank profitability. Specifically,
credit risk, income diversification, capitalization, loans, and deposits are the most
important determinants of bank profitability. Bank size, capitalization, loans, revenue
diversification, management efficiency, and GDP have positive effects whereas
deposits, credit risk have negative impacts.
From the results, this thesis suggests that banks should resolve their credit
risk problems by improving their credit risk management and transparency of system.
In addition, enhancing their lending activities and business diversification, increasing
their staffs’ qualifications, and expanding their business operations are necessary. | en_US |
