MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF ECONOMICS
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LE THI THANH VAN
FACTORS AFFECTING THE PROFITABILITY OF BUSINESSES
VIETNAM COMMERCIAL BANK
MASTER'S THESIS IN ECONOMICS
Ho Chi Minh City, 2017
MINISTRY OF EDUCATION AND TRAINING
HO CHI MINH CITY UNIVERSITY OF ECONOMICS
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LE THI THANH VAN
FACTORS AFFECTING THE PROFITABILITY OF BUSINESSES
VIETNAM COMMERCIAL BANK
Major: FINANCE-BANKING
ROW
Industry code: 60340201
MASTER'S THESIS IN ECONOMICS
SCIENTIFIC INSTRUCTOR: ASSOCIATE PROFESSOR, DR. NGUYEN NGOC DINH
COMMITMENT
My name is Le Thi Thanh Van, author of the graduation thesis "Factors affecting profitability at Commercial Banks in Vietnam"
I hereby certify that the content of this thesis is the result of my own research under the guidance of Associate Professor, Dr. Nguyen Ngoc Dinh. The data used in this research were collected by the author through transparent documents with clear sources. The author has consulted the content of relevant documents in developing theories, research methods, and selecting appropriate variables. These documents have been listed in the reference section.
Ho Chi Minh City, date month year I pledge
Le Thi Thanh Van
INDEX
COVER PAGE GUARANTEE
INDEX
LIST OF ABBREVIATIONS
LIST OF TABLES AND GRAPHS RESEARCH SUMMARY
CHAPTER 1: INTRODUCTION TO THE STUDY 1
1.1 Reasons for choosing the topic: 1
1.2 Research objectives: 2
1.3 Research questions: 2
1.4 Research object and scope: 2
1.5 Research methods: 3
1.6 Research significance: 3
1.7 Structure of topic 4
CHAPTER 2: THEORY OF FACTORS AFFECTING THE PROFITABILITY OF COMMERCIAL BANKS AND OVERVIEW OF PREVIOUS STUDIES 5
2.1 Overview of bank profitability 5
2.1.1 Concept 5
2.1.2 Determining the profitability of banks 6
2.1.2.1 Return on Asset (ROA) 6
2.1.2.2 Return on Equity (ROE) 6
2.1.2.3 Net interest Margin (NIM) 7
2.2 Profitability analysis models 7
2.3 Factors affecting profitability 8
2.3.1 Internal factors: 8
2.3.1.1 Bank size 9
2.3.1.2 Equity 9
2.3.1.3 Asset structure 10
2.3.1.4 Customer lending and credit risk 10
2.3.2 External factors 11
2.3.2.1 Inflation 11
2.3.2.2 Economic growth rate 11
2.4 Overview of some previous studies 12
CHAPTER 3: RESEARCH MODEL OF FACTORS AFFECTING THE PROFITABILITY OF VIETNAMESE COMMERCIAL BANKS 22
3.1 Research data 22
3.2 Introduction of variables in the model: 22
3.2.1 Dependent variable 23
3.2.2 Explanatory variables 23
3.2.2.1 Group of explanatory variables within the bank 23
3.2.2.2 External explanatory variables group 26
3.3 Research model: 28
3.4 Research methods 29
3.4.1 Descriptive statistical methods 29
3.4.2 Multicollinearity testing in model 29
3.4.3 Testing for autocorrelation in model 30
3.4.4 Estimating the panel data model 30
3.4.5 Select the appropriate estimation model for the research data. 32
3.4.5.1 Choosing between Pooled OLS model and FEM model 32
3.4.5.2 Choosing between Pooled OLS and REM 33 models
3.4.5.3 Choosing between FEM and REM models 34
CHAPTER 4: RESEARCH RESULTS AND DISCUSSION OF THE MODEL OF FACTORS AFFECTING THE PROFITABILITY OF VIETNAMESE COMMERCIAL BANKS 37
4.1 Overview of the current performance of Vietnamese Commercial Banks 37
4.1.1 Return on equity 37
4.1.2 Return on total assets: 38
4.1.3 Capital mobilization situation 39
4.1.4 Credit activities 41
4.2 General assessment of the profitability of Vietnamese commercial banks in recent times 42
4.3 Experimental results from regression model 44
4.3.1 Descriptive statistical results 44
4.4 Estimation results of Pooled OLS, FEM, REM regression models 44
4.5 Testing for multicollinearity in model 47
4.6 Dunbin - Watson test for autocorrelation in model 49
4.7 Hausman test for choosing between FEM and REM models 49
4.8 F_Test to choose between Pooled OLS and FEM 50 models
4.9 Discussion of research results 50
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS TO IMPROVE PROFITABILITY OF VIETNAMESE COMMERCIAL BANKS 55
5.1 General conclusion about topic 55
5.2 Some suggestions 56
5.2.1 Suggested opinions from the results of the model 56
5.2.2 Some suggestions for bank managers 58
5.3 Limitations and research directions of the topic: 59
CONCLUSION 61
REFERENCES
APPENDIX 1: LIST OF VIETNAMESE COMMERCIAL BANKS USED IN THE STUDY
APPENDIX 2: DESCRIPTIVE STATISTICS OF VARIABLES IN THE MODEL
APPENDIX 3: RESULTS OF THE CORRELATION COEFFICIENT MATRIX BETWEEN THE EXPLANATORY VARIABLES OF THE MODEL
APPENDIX 4: RESULTS OF MODEL ESTIMATION WITH DEPENDENT VARIABLE ROA
APPENDIX 5: RESULTS OF MODEL ESTIMATION WITH DEPENDENT VARIABLE ROE APPENDIX 6: RESEARCH SAMPLE
LIST OF ABBREVIATIONS
ASEAN : Association of Southeast Asian Nations
APEC : Asia-Pacific Economic Cooperation Forum BCTC : Financial report
BCTN: Annual Report
SBV: State Bank
Commercial Bank: Commercial Bank Joint Stock Commercial Bank: Joint Stock Commercial Bank NIM: Net Interest Margin
ROA: Ratio of profit after tax to average total assets
ROE: Return on average equity TPP: Trans-Pacific Partnership Agreement
WTO : World Trade Organization
POOLED OLS : Ordinary least squares estimation model FEM : Fixed effects estimation model
REM : Random Effects Estimation Model