The research questions are set out to achieve the main objective of the thesis. This is also a solid basis for the thesis to propose or suggest policies for bank managers, policy makers and other relevant parties to build strategies to enhance competitiveness and strengthen financial stability of Vietnamese commercial banks when joining CPTPP - a comprehensive and progressive agreement in the modern trend.
The study achieved most of its initial objectives. Specifically:
- Current status of operations of Vietnamese commercial banks compared to other countries in CPTPP in 2010
– 2018: The thesis collected, calculated and synthesized secondary data from consolidated financial statements to serve as a basis for assessing the current performance of 31 Vietnamese commercial banks (Appendix 1). On the other hand, the thesis used a number of macro factors characterizing the performance of the banking system of 11 member countries collected from the IMF and WB to compare, evaluate and have an overview of each member in the CPTPP community.
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- Measuring the competitiveness and the impact of factors on the competitiveness of Vietnamese commercial banks in the context of CPTPP integration (MH1 model) : The thesis has conducted regressions on the factors of Equity size on total assets, Natural logarithm of total assets, Growth rate of total assets, Loan/Total assets ratio, Mobilized capital/Total assets ratio, Credit risk provision ratio, and the factor measuring the presence of foreign banks in Vietnam affecting the competitiveness of banks. The estimated results of the model all show statistical significance between the above factors in correlation with the competitiveness of banks. This is true for most of the initial expected hypotheses and is also consistent with most previous studies.
- Measuring the level of stability and the impact of factors on the stability of Vietnamese commercial banks in the context of CPTPP integration (MH2 model) : The thesis has conducted regressions of the factors Natural logarithm of total assets, Growth rate of total assets, Loan/Total assets ratio, Mobilized capital/Total assets ratio, Credit risk provision ratio, Factors measuring the presence of foreign banks in Vietnam affecting bank stability. In the research model, competitive factors and control variables have specific characteristics of the bank with variables reflecting the level of bank stability. The results of the model show that the regression coefficients are all statistically significant. This reflects that the bank's competitive strategy has a positive impact on maintaining bank stability in Vietnamese commercial banks.
This is consistent with most of the initial expectations and is also consistent with most previous studies.
- Measuring the impact of competitiveness on the stability of Vietnamese commercial banks in the context of CPTPP integration (MH3 model) : The research model is built with factors such as competition (through Lerner variables) and control variables with specific characteristics of the bank with variables reflecting the stability of the bank. The results of the model show that the regression coefficients are all statistically significant, the increase in competitiveness of banks has a positive impact on bank stability. This reflects that the competitive strategy of banks has a positive impact on maintaining bank stability in Vietnamese commercial banks. The research results support the view that "competition - easy to be unstable". This is consistent with the initial expectation and is also consistent with most previous studies by Berger et al. (2009) and Hoang Thi Phuong Anh et al. (2018) found.
- Strengths, weaknesses, opportunities and challenges for Vietnamese commercial banks in increasing competitiveness and banking stability in the context of participating in CPTPP: Based on the results of the synthesis of research on the current state of operations of Vietnamese commercial banks, comparison in the CPTPP community and the results of empirical measurements of competitiveness and banking stability of Vietnamese commercial banks, the thesis has drawn some prospects as well as pressures for competition and banking stability in the context of integration. This is the basis for increasing the stability of arguments, assessments, and policy implications for managers in general and Vietnamese commercial banks in particular to take advantage of opportunities, promptly respond to challenges to improve competitiveness and maintain stability in the context of CPTPP integration.
- Policy implications: Based on the objectives and scope of the initial research content and the results achieved from the 5 specific objectives, the thesis also proposes policy implications to improve the competitiveness and stability of Vietnamese commercial banks in the context of CPTPP integration.
5.2. Policy implications to enhance competitiveness and strengthen financial stability of Vietnamese commercial banks in the context of CPTPP integration
Vietnamese commercial banks need to develop and implement strategies to enhance competitiveness, maintain and increase stability, promote strengths, overcome weaknesses, and take advantage of opportunities and respond effectively to challenges of the CPTPP. Accordingly, at the level
The government needs to establish an interdisciplinary steering committee, gathering good officials and experts from ministries, sectors, and key business representatives to coordinate policy development and implement a comprehensive strategy to help Vietnam successfully implement the CPTPP in the coming years.
To effectively utilize CPTPP, overcome incompatibility in development and business levels, enhance competitiveness and enhance stability in the context of CPTPP integration, Vietnamese commercial banks need to quickly implement the following solutions:
5.2.1. Improving financial capacity
From the results of empirical measurement of NCCT and the level of bank stability of 31 Vietnamese commercial banks in the period of 2010 - 2018, it shows that factors such as Equity size (ETA), Bank size (B_SIZE), Total asset growth rate (GroTA) have a positive impact on the competitiveness and stability of banks.
However, when considering the impact of NLCT on bank stability, the results show that increasing bank size and total asset growth rate will reduce the stability of the bank. This raises the question for bank managers and management agencies whether increasing assets really brings economic efficiency, increases NLCT and stabilizes the bank. To find the answer to this problem, managers must have measures to more accurately assess the quality of assets, the efficiency of using loans as well as equity. Specifically, it is necessary to develop criteria to assess the efficiency of capital use of banks in all areas, find out the reason for increasing assets to meet liquidity needs or profit goals. In the context of many difficulties in the domestic economy over the past time, increasing assets to serve liquidity is necessary. However, in the long term, this is not a good sign for banks.
Credit size represents the credit activities of banks. The regression results show that increasing Credit Size (LTA) has a positive impact on the NLCT and stability of Vietnamese commercial banks. However, practical connections show that most banks have bad debts that are difficult to recover, seriously affecting monetary security and the domestic financial system. Commercial banks lend more, but the risk of capital loss also appears, reducing the quality of loans. Although lending activities bring income to banks, they also cause serious losses when risks arise, thereby affecting financial stability for banks.
banks. Therefore, banks need to review the credit quality of loans. In addition, bank managers and executives also need to promote and support commercial banks in handling bad debts and improving the financial system to avoid causing damage to the banking system. From there, create conditions for recovery, help the financial market return to its previous vibrant operation, and truly play its role as the main capital transmission channel for the economy.
In the current conditions, to improve financial capacity, Vietnamese commercial banks need to immediately solve three main problems: handling bad debt, increasing equity capital and credit scale.
- Continue to handle bad debts of Vietnamese commercial banks
The problem of bad debt has a great impact on the competitive position as well as the ability to stabilize under market pressure of Vietnam in general and commercial banks in particular. Many comments, policy implications, and solutions have been mentioned and applied in practice to overcome this problem, initially achieving many positive results, bad debt has decreased. However, this is an issue that needs to be controlled regularly, long-term and effectively. The solutions that have been and are being implemented are: supporting and restoring liquidity for the entire commercial banking system. Merging or eliminating weak banks and credit institutions in the banking system. Along with the above series of measures, the State Bank requires banks to fully, seriously, accurately and strictly declare bad debts. Commercial banks are required to set up provisions at specific prescribed levels.
Resolving bad debt is not a matter of the State Bank and the commercial banking system alone. This is a matter related to the entire economy, requiring the participation and responsibility of all other state agencies, including the Government and the National Assembly, along with the business system in general... At the same time, this is also the process of mobilizing resources from outside the banking system to help the system regain balance, handle bad debt, and restore the financial intermediary function. Some solutions can be flexibly applied to the specific characteristics of each bank such as: First, each bank needs to proactively increase the provision level for bad debt within the permitted conditions and in accordance with the actual situation of that bank, and can accept a decrease in profits. Second, banks need to have reasonable salary and bonus policies during this difficult period and handle them flexibly to maintain and promote operational efficiency. This method helps reduce costs reasonably to support the increase in the provision level for the ratio.
bad debt. Third, with the trend of expanding cooperation to develop the market, especially the international market, the entry of foreign markets into Vietnam is a strong wave in the context of integration. Foreign banks with large capital, facilities, scientific and technological level, and professional management will be a good opportunity for domestic banks to increase their financial potential, so banks can consider increasing the ownership ratio of foreign investors. At the same time, it is also allowed to increase the ownership ratio of foreign strategic investors. Fourth, the Government needs to allow some domestic banks or foreign banks with strong financial potential and good corporate governance to acquire weak banks. However, this acquisition requires financial support and good control from the State Bank. Fifth, reduce or exempt taxes (VAT, corporate income tax, etc.), unnecessary procedures and facilitate debt trading activities to promote the formation and development of the debt trading market...
- Increase equity capital of Vietnamese commercial banks
Ensuring capital safety is one of the three core pillars that determine the safety and soundness of the banking system. Therefore, restructuring the equity capital of Vietnamese commercial banks is a particularly important program in the restructuring process of the Vietnamese commercial banking system.
According to the National Financial Supervisory Commission's estimates, banks must increase their equity capital by 1.8 - 2 times compared to the current level. According to Moody's, with the current credit growth rate, Vietnamese banks will need an additional 7 - 9 billion USD to increase capital to ensure the Tier 1 capital safety ratio at 11% in 2018 and 2019.
Therefore, in the next phase, Vietnamese commercial banks need to be proactive in developing a roadmap and appropriate solutions to increase equity/charter capital. Firstly, the Government directs the SBV and the Ministry of Finance to approve commercial banks to balance and decide on the use of annual dividend sources to increase capital for the following year through the form of paying dividends in shares depending on the financial capacity and conditions of the bank. Secondly, commercial banks themselves need to proactively strengthen risk management to reduce risk provision costs, which are a very large expense item in business operations, and at the same time need to implement a reasonable management cost savings policy. Thirdly, for commercial banks facing difficulties in equity capital, the Government directs the SBV to complete a project to improve the overall financial capacity of the commercial banking sector, thereby identifying
Specifically define the plan and roadmap for capital increase for the commercial banking sector and have appropriate support policies for each bank. Fourthly, the Government promotes equitization and reduces the State ownership ratio in commercial banks. The solution of increasing capital through selling shares to foreign strategic investors is very beneficial, because foreign investors have strong financial potential and a lot of management experience. However, the selection of foreign strategic investors also depends on the specific conditions of each bank, market conditions and Government policies. Fifthly, the Government directs State agencies to create conditions for banks to implement the plan of issuing shares to the public. At that time, banks will proactively seek investors and small shareholders to sell shares, issue preferential shares to employees to increase capital. This solution is only favorable when existing shareholders have financial strength and do not want to reduce their ownership ratio, in conditions of a stable and favorable stock market development. Sixth, accelerate the equitization process or attract financial investors and strategic investors to create conditions for commercial banks to attract more capital from both domestic and foreign investors, thereby improving financial capacity and gaining access to modern technology and advanced management skills of foreign investors. In addition, there needs to be a strategy, the Government needs to have a comprehensive solution so that the stock market and bond market are channels to meet long-term capital needs for businesses, reducing pressure on long-term credit growth from commercial banks.
- Expand credit scale
As mentioned above, Credit Scale represents the credit activities of the bank. The regression results on 31 Vietnamese commercial banks in the period of 2010 - 2018 show that increasing Credit Scale (LTA) has a positive impact on the competitiveness and stability of Vietnamese commercial banks. Therefore, the need to expand credit scale is of great importance in increasing competitiveness and increasing bank stability. In the context of an increasingly expanding market, increasing competition and financial instability that may occur in the new situation, to expand credit scale, Vietnamese commercial banks can apply through a number of solutions to increase the efficiency of credit scale expansion such as: First , promote revenue growth: Developing credit services in conjunction with developing non-credit services is an effective measure to increase revenue in current conditions. Depending on the reality, each commercial bank needs to have specific and synchronous measures to strengthen credit risk management and improve the quality of work.
appraisal, post-lending inspection to reduce bad debt ratio. Second, reduce costs: To increase profits, in addition to efforts to increase revenue, efforts to reduce costs are an important step, so it is necessary to have measures to strictly control costs. Develop specific criteria for recording reasonable costs incurred. It is necessary to have a plan to allocate specific costs to each business and each department to monitor and evaluate performance, thereby finding measures to reduce costs or eliminate costs that do not bring added value. Raise awareness of saving and anti-waste of all officers and employees. Research and develop cost norms associated with business results for each department and each type of business. Third, increasing mobilized capital with low interest rates will significantly reduce the bank's operating costs. Vietnamese commercial banks need to pay attention to finding and increasing cheap capital sources by developing non-cash payment products and services, connecting payments with customers, developing collection and payment services, promoting the development of card services, Mobilebanking services, and payroll services via accounts, thereby increasing the balance in customers' payment accounts to take advantage of that cheap capital source for banking operations. In addition, promoting the application of technology to reduce costs, the process of developing and applying technology will be associated with changing the processing procedures, especially when new technology helps automate transactions, which will help banks reduce a lot of costs, reduce service prices, thereby helping banks increase competitiveness and increase profits.
5.2.2. Having an effective competitive strategy at Vietnamese commercial banks
In the empirical measurement of the impact of NLCT on bank stability, the results show that NLCT has a positive impact on bank stability, which means that banks with high NLCT will increase and strengthen financial stability. Thus, bank managers should regularly focus on strengthening NLCT to gain market share, bringing more efficiency to banks.
Competition means exploiting and taking advantage of resource advantages to save costs or gain price and product quality advantages compared to other competitors. To do this, commercial banks need to focus on the following main activities: Effectively manage reasonable operating costs. Most of these costs are used to pay employee salaries and other related allowances. In fact, the current human resources in commercial banks are redundant compared to the requirements of the job.
work. This is the result of the massive recruitment process in previous years, when banking activities were quite active. However, up to now, the economic situation has encountered many difficulties, the financial sector has been narrowed. Most banks are in a state of surplus personnel. Cutting personnel in the direction of job rotation, work schedules and compensatory leave helps reduce costs and the bank will manage more centrally, efficiency will be higher. In addition, besides reducing salaries, the bank's recruitment process must pay more attention to the capacity, qualifications and suitability for the job of the candidate. The quality of the bank's training programs must also be selective, focusing deeply on expertise, improving responsibility as well as professional attitude for employees. Develop criteria to check and evaluate the work efficiency of each employee.
Currently, commercial banks are facing difficulties due to competitive pressure from foreign banks. If commercial banks develop a cooperation strategy with potential partners, they will have the opportunity to exploit modern technology, infrastructure and management level. This will save a lot of investment costs, management costs, and improve the efficiency of capital and asset use. In addition, banks must also have a policy focusing on exploiting technology development to create modern, highly specialized products and services to further increase competitiveness. Particularly for managers and policy makers, to contribute to supporting banks to strengthen their competitiveness and increase banking stability, it is necessary to create a healthy and open environment to attract investors. Along with the business environment are policies to encourage and create many incentives for banks to develop technology and invest in modernizing infrastructure. However, it should be noted that management agencies must do a good job of operating and closely monitoring the business activities of commercial banks to avoid unhealthy competition in the banking system.
5.2.3. Expand investment and develop banking services to customers
The empirical measurement results of the study show that income diversification capabilities have positively impacted the competitiveness and banking stability of Vietnamese commercial banks over the past time. Therefore, to increase competitiveness and ensure financial stability, commercial banks need to expand their operations to other non-traditional areas. This is an inevitable development trend when most of the world's banks' revenue sources come from products.