Competitiveness of Commercial Banking System in Vietnam

4. Research objects and scope

- Research object: Theoretical and practical issues related to competition and competitiveness of the commercial banking system.

- Scope of research: The thesis studies the competitiveness of the Vietnamese commercial banking system in the domestic business environment. From there, the thesis focuses on evaluating the current status of the competitiveness of the Vietnamese commercial banking system in the period 2005-2013 to propose solutions to improve the competitiveness of the Vietnamese commercial banking system by 2020.

5. Scientific and practical significance of the research topic

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- In theory: International economic integration is increasingly deep, competition among commercial banks is increasingly fierce in a wide range, competition, competitiveness and improving the competitiveness of the commercial banking system are basic theoretical issues that need to be changed and improved to suit the development of the commercial banking system in each period.

- In reality: When moving to a market economy, Vietnamese commercial banks have initially integrated into the international economy and promoted their strengths. However, the competitiveness of the Vietnamese commercial banking system is not high and lacks sustainability.

Therefore, systematic research in both theory and practice is absolutely necessary to propose reasonable solutions to improve the competitiveness of the Vietnamese commercial banking system.

6. Research method

To complete the thesis, the researcher used a synthesis of many argumentative methods, including dialectical materialism and historical materialism of Marxism - Leninism; Methods of approaching and collecting information, analyzing, evaluating and comparing; Methods of forecasting research and research to propose solutions.

7. New contributions of the thesis

- The thesis has distilled, inherited and systematized, clarified a number of theoretical issues on competition, the competitiveness of commercial banks in international economic integration, especially clearly analyzed the influencing factors and proposed a system of indicators to evaluate the competitiveness of commercial banks.

- Pointed out some impacts (positive and negative) of international economic integration on the competitiveness of commercial banks.

- Analyze and evaluate deeply and in detail the current competitive capacity of the Vietnamese commercial banking system during the period 2005 - 2013, thereby drawing some results, shortcomings and causes.

- Proposing a system of synchronous and feasible solutions to improve the competitiveness of the Vietnamese commercial banking system in the context of international economic integration.

8. Structure of the thesis

In addition to the introduction, conclusion, list of the author's published works related to the thesis and list of references, the thesis is divided into 3 chapters (142 pages).

Chapter 1: Competitiveness of the Commercial Banking System in

conditions for international economic integration (52 pages)

Chapter 2: Current status of competitiveness of Vietnam's commercial banking system in the context of international economic integration (50 pages)

Chapter 3: Solutions to improve the competitiveness of the Vietnamese Commercial Banking system in the context of international economic integration (40 pages)

Chapter 1

COMPETITIVENESS OF COMMERCIAL BANKING SYSTEM IN THE CONDITION OF INTERNATIONAL ECONOMIC INTEGRATION

1.1. COMMERCIAL BANKING SYSTEM INTEGRATING INTO THE INTERNATIONAL ECONOMY

1.1.1. Commercial Banking System

1.1.1.1. Commercial bank

Commercial banks are one of the most important financial institutions of the economy.

So what is NHTM?

The most conservative approach would be to consider commercial banks in terms of the types of services they provide. Under US law, any institution that offers deposit accounts that allow withdrawals on demand and makes loans to business and commercial organizations would be considered a commercial bank.

According to the Law on Credit Institutions (CIs) No. 47/2010/QH12 dated June 16, 2010, a commercial bank is a type of bank that is allowed to carry out all banking activities and other business activities as prescribed by law with the aim of making profit. Nowadays, there are many organizations operating in one or several aspects of commercial banks. The results of a number of surveys on banking services have shown that commercial banks are undergoing strong changes in function and form.

Thus, in the most general way, it can be seen that a commercial bank is a special enterprise operating and doing business in the field of currency and credit with constant changes in content and form.

The emergence and existence of commercial banks also aim to serve the needs of society (whether those needs come from the people, businesses or the Government within the national or international scope) through the form of providing a list of commercial banking services.

1.1.1.2. Commercial banking system

System - is a set of components and parts that are coordinated together in a close and scientific manner to achieve a number of set goals.

A set is considered a system if it has three main characteristics:

First: A system consists of components, parts (also known as elements) that usually have some similar properties or characteristics.

Second: These components are coordinated with each other according to a certain method or process. There will be no system if the elements just stand next to each other separately, because the relationship between the elements is a vital issue, creating the system's characteristics and operating conditions.

Third: This coordination aims to achieve one or more specific goals.

Thus, commercial banks in the system is inevitable because commercial banks have similar characteristics and operating properties and always coordinate with each other, together carrying out a number of operational processes to achieve certain goals. In the commercial banking system, each commercial bank, regardless of the number of branches, is an element of the system. Branches of a commercial bank are not considered an element of the system because they only operate under the authorization of the center (Head Office) and cannot be separated to independently link and coordinate activities with other banks.

The commercial banking system has its own characteristics and operating conditions, different from other financial institutions in that:

- Commercial banks always have transactions to borrow or deposit money with each other on the interbank market... with the purpose of temporarily investing temporarily idle capital to make a profit or finding cheaper capital sources than borrowing from the Central Bank. These transactions make commercial banks dependent on each other due to liquidity factors, so if a commercial bank in the system encounters liquidity risk, the possibility of causing liquidity risk for the entire commercial banking system is very high.

- The emergence of diverse financial needs has created opportunities for the development of correspondent banks. The correspondent banks will help small-scale commercial banks perform a number of services to save time and investment costs... thus making the connection between elements (commercial banks) in the system more complex, binding and tighter.

- To meet the diverse payment needs of customers, a network of payment channels has been established between commercial banks, this is a channel system.

guide and connect banks together, helping the capital flow of the economy to be smooth.

Thus: The commercial banking system is a collection of commercial banks that are closely and scientifically coordinated to achieve a number of set goals.

1.1.2. International economic integration

1.1.2.1. Concept of international economic integration

International economic integration, in the simplest and most common concept in the world, is the linking of economies together. In this sense, economic integration has been going on for thousands of years and economic integration on a global scale has been going on since two thousand years ago when the Roman Empire invaded the world and expanded its transportation network, promoted the circulation of goods throughout its vast occupied territory and imposed its currency on all places.

Economic integration, more strictly understood, is the institutional linking of economies together. This concept was proposed by Besla Balassa in the 1960s and has been widely accepted in academic and policy circles. More specifically, economic integration is a process of proactively carrying out two things at the same time: on the one hand, linking each country's economy and market with regional and world markets through efforts to open up and promote the liberalization of the national economy; and on the other hand, joining and contributing to the construction of regional and global economic institutions.

Economic integration can be bilateral - that is, between two economies, or regional - that is, between a group of economies, or multilateral - that is, on a global scale like what the World Trade Organization is aiming for. In terms of level of integration, it is usually divided into six levels: preferential trade area/agreement, free trade area/agreement, customs union, common market, economic and monetary union, and comprehensive integration.

1.1.2.2. Trend of international economic integration

In today's economic context, international economic integration is an inevitable trend and an objective requirement for any country in the development process. This trend is becoming increasingly evident, especially in the economy.

The market is becoming a common playground for all countries; the financial market is expanding its scope of operations almost without borders, both facilitating increased cooperation and deepening and intensifying competition.

For developing countries in the process of transition, the need for economic integration becomes more urgent and meaningful; it requires these countries to not stand outside the process of international economic integration in all aspects if they want to succeed in economic development. The trend of international economic integration requires countries around the world to participate more and more deeply in international economic exchanges, especially in trade, finance, investment and participation in international economic and trade mechanisms on a global and regional scale.

International economic integration will bring fundamental and long-term benefits, especially for countries that are capable of adjusting their economic structures and appropriate policies. It will also create opportunities for countries to cooperate and unite to create enough strength to compete and negotiate with large countries, preventing the possibility of being oppressed and isolated in negotiations - implementing international trade and investment. Thereby, the national position will be increasingly enhanced. This is also the fundamental reason why most countries, regional and world economic organizations are committed to promoting the process of economic reform and development associated with international integration. Along with the benefits and opportunities created by international economic integration, countries will also face many risks and challenges, especially in the issue of increasing competitive pressure even in the domestic market. That is an important driving force to encourage domestic enterprises to restructure production, improve management skills and increase competitiveness.

In fact, many countries have succeeded after the integration process and have become newly industrialized countries (NICs) thanks to their active participation in the international economic integration process. However, they have also had to face and suffer many disadvantages in the face of risks and challenges in the early stages of the integration process. The application of the principles of the World Trade Organization (WTO) or the implementation of bilateral and multilateral trade agreements

The integration process requires countries, especially developing countries, to make profound adjustments to economic policies, improve competitiveness and adjust economic structures accordingly. In fact, the more active and proactive integration is, the lower the costs and losses in the early stages of integration compared to prolonging the integration process.

International economic integration always comes with two sides: gains and losses. However, no country gains everything and no country loses everything. There is only one situation where one will definitely lose everything: shrinking, closing the door and refusing to join the integration trend.

1.1.3. The commercial banking system integrates into the international economy

1.1.3.1. Concept

In the banking sector, international integration is the process of opening up to integrate the domestic banking system with the regional and world banking system. Banking activities are no longer limited to the scope of one country or one region but expand globally.

Banking activities must always compete within the legal framework, comply with international business principles, banking activities are carried out according to market signals without being prevented by administrative management measures, interest rates, exchange rates, and credit activities are decided by the market.

The process of international economic integration of the banking system can be understood as the process of gradual reform of the banking system arising from the practical requirements of the globalization of the national economy, because only then can the banking system assume and promote its role as a financial intermediary in the context of an economy with many complex fluctuations of the international market in general and the domestic market in particular.

When international integration in the banking sector requires the government and the state bank to eliminate incentives, moving towards equal competition between domestic and foreign banks. Therefore, the level of international integration in the banking sector is closely related to the level of financial and monetary liberalization. The more effective and extensive the implementation of financial and monetary liberalization is, the more favorable the banking integration will be.

Thus, based on both the theory and practice of development of world economies, it is affirmed that: a country that wants to exist, develop stably and sustainably needs to proactively integrate internationally, especially proactively and successfully integrate into the banking and finance sector - a sensitive and important sector of the national economy.

1.1.3.2. The inevitable trend of international economic integration in the banking sector

The integration of the commercial banking system into the international economy is an objective necessity, stemming from the following reasons:

Firstly, international economic integration has become a trend of the times and is taking place strongly in many fields. Accordingly, in parallel with reaching out to the world market, Vietnam must also open up the domestic market, including the financial and banking sector. In that general context, the Vietnamese commercial banking system must proactively recognize and be ready to participate in the integration and competition process because at that time the domestic market will no longer have a high level of protection as before, banks will have to compete globally and compete right at home.

Second, the more developed the production of goods, the more goods are sold, the more suppliers there are. To survive and develop, businesses are forced to compete with each other. As a result, some businesses lose and are pushed out of the market, while others still exist and develop further. Competition takes place anytime, anywhere, regardless of the subjective will of each individual, so competition becomes an important rule that promotes development. Every business, regardless of economic sector, must move on its own to stand in this mechanism. Any business that cannot adapt will certainly go bankrupt and be eliminated. Being ready to accept competition and constantly improve competitiveness is a matter of survival for every business. Especially in the current integration period, businesses can only develop when their competitiveness is improved.

Third, in reality, no bank is able to satisfy

meet all the requirements of the customer. Usually a bank has the advantage

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