The figure shows that the residual distribution of the regression model has the shape of a normal distribution with a standard deviation (Std.Dev.) close to 1 and a mean of the residual (Mean) close to 0. Therefore, the assumption of normal distribution of the residual is satisfied.
4.2. Model results
Table 4.6: OLS regression results for the model
Model
Unstandardized Coefficients | Standardized Coefficients | t | Sig. | |||
B | Std.Error | Beta | ||||
(1) | (2) | (3) | (4) | (5) | (6) | |
1 | (constant) | 45,384 | 6.160 | 7,368 | .000 | |
SIZE | .070 | .007 | .481 | 9,498 | .000 | |
GROWTH | .001 | .003 | .014 | .305 | .761 | |
LIQ | -.064 | .014 | -.221 | -4.532 | .000 | |
TANG | -0.843 | .211 | -.187 | -4.001 | .000 | |
PRO | -2.934 | .414 | -.336 | -7.083 | .000 | |
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(Source: Author runs model from SPSS 20 software)
Table 4.6 shows the results of OLS regression for the model of factors affecting the employees of commercial banks in Vietnam. Column (4) shows the relationship between factors affecting employees and column (6) shows the Sig. value of the factors of Bank size (Size), liquidity (Liquidity), tangible assets (Tangibility) and profitability (Profitability) is less than 5%, showing that the relationship between these factors is statistically significant. For the growth opportunity factor (Growth), the value is greater than 5%, so it is not statistically significant.
From the results of the OLS regression model, the author summarizes the results achieved as follows:
Table 4.7: Research results on factors affecting the staff of commercial banks
Influencing factors
Symbol | Experimental studies | Expected | Research results | ||
Correlate | Meaning | ||||
Bank size | SIZE | + | + | + | 1% |
Growth opportunities | GROWTH | + | + | ? | |
Liquidity | LIQ | - | - | - | 1% |
Tangible assets | TANG | - | - | - | 1% |
Profit | PRO | - | - | - | 1% |
(Source: author processed data using SPSS 20 software)
The summary table above gives us the general research results on the influence of independent variables on the CTV of commercial banks in Vietnam as follows:
+ The scale factor has a positive relationship with the financial leverage of the Bank at a significance level of 1% and is the factor that has the strongest impact on financial leverage. This means that the larger the size of the Bank, the higher the financial leverage. As we know, Banking is a special sector of the economy, the capital mobilization of the Bank is mainly based on the trust of the people in that Bank without requiring collateral. Therefore, the larger the scale of the Bank, the higher the trust it will receive. This is clearly demonstrated by the fact that commercial banks in Vietnam have recently competed to expand their operating network from urban to rural areas to facilitate customers in transactions, helping banks to maximize the amount of idle money in the people as well as enhance brand value. This result is consistent with the research results of Reint Gropp and Florian Heider (2009), Sajid Gul et al. (2012), Khizer Ali and colleagues (2011), Mohammad Amidu (2011), Hoa Nguyen and Zainab Kayani (2013) when studying bank employees in countries around the world.
+ The growth opportunity variable has a positive impact on the bank's CTV, this impact is quite low but not statistically significant. Meanwhile, some empirical studies in countries around the world show a correlation with financial leverage and have statistical significance such as the study of Sajid Gul and colleagues (2012) on CTV in the banking sector and the insurance sector in Pakistan, the study of Mohammed Amidu (2007) on CTV of banks in Ghana or the study of Nguyen Hoang Chau (2011) on CTV of commercial banks in Vietnam, the growth opportunity variable has a positive impact on the bank's CTV and is statistically significant. However, the research of Thian Cheng Lim (2012) on CTV of financial services companies in China, Naveed Ahmed and colleagues (2010) on CTV of the insurance business sector has the result that the growth opportunity factor has a negative impact on CTV. The reasons why the growth opportunity variable is not significant are due to the following reasons:
Before implementing Decree No. 141 of the Prime Minister on increasing charter capital to a minimum of 3,000 billion VND, most commercial banks in Vietnam started out as small commercial banks with relatively low total assets. Therefore, in order to compete when Vietnam joined the WTO and allowed foreign banks to participate in the financial market, most banks tended to increase their total assets rapidly.
The rapid increase in total assets forced commercial banks in Vietnam to use higher debt, that is, to increase mobilization of deposits from the majority of the population, from economic organizations or interbank loans, so the level of financial leverage increased along with the growth of total assets, which is completely consistent with the above studies.
However, from 2010 to 2011, when the deadline for raising the charter capital of commercial banks to 3,000 billion VND was about to expire, commercial banks focused on increasing charter capital. This caused the debt/total asset ratio of most small banks to tend to decrease and not increase at the same rate as the growth rate.
of total assets makes the growth opportunity variable insignificant in this period. This period makes the growth opportunity variable statistically insignificant when analyzing the impact on the capital adequacy of commercial banks in Vietnam in the period 2007 - 2011.
+ The liquidity factor has an inverse relationship with the bank's assets and has a significant impact on financial leverage. It can be said that liquidity reflects the "health" of the bank during its business operations. In reality, there have been many cases where an economic organization has a lot of assets and very little debt but can completely go bankrupt because the liquidity risk of the assets cannot compensate for the payment capacity at that time. However, too high a liquidity will not be beneficial to the bank because the amounts that can be used to pay customers often bring little income to the bank. On the contrary, if the liquidity is too low, it can make it difficult for the bank to ensure the payment capacity when customers have a need and at the same time reduce the bank's reputation. In recent years, the credit performance of 30 commercial banks selected for research has increased over the years, specifically: in 2007, the loan/deposit ratio was 69.59%; in 2008, the ratio reached about 72.29%; in 2009, this ratio was at 75.75%; in 2010 and 2011, this ratio was approximately 70%. Although this ratio is quite safe for commercial banks, lending to high-risk industries, along with poor credit management quality, will affect the liquidity of the Bank. This result is consistent with a number of studies by Sajid Gul, Muhammad Bilal Khan, Nasir Razzaq, Naveed Saif (2012); Naveed Ahmed, Zulfqar Ahmaed, Ishfaq Ahmed (2010); Khizer Ali, Muhammad Farhan, Akhtar, Shama Sadaqat (2011).
+ Tangible assets factor is negatively correlated with CTV. This result is contrary to the trade-off theory and agency cost theory which states that the higher the fixed assets of enterprises, the more likely they are to use debt due to the collateral. However, the author's research results are consistent with the research of Sajid Gul, Muhammad Bital Khan, Nasir Razzad and Naveed Saif (2012) in Pakistan;
Mohammed Amidu (2007) in Ghana. However, we see that the impact of the independent variable tangible assets on CTV is relatively low, only 13.56% because commercial banks in Vietnam today have only 5 state-owned banks holding the controlling stake, the rest are mostly private banks that independently account for themselves but are governed by regulations and decrees of the Government and under the strict control of the State Bank. This shows that in the recent past, many banks that have been facing liquidity difficulties have been sponsored by the State Bank in stabilizing liquidity sources. This support from the State Bank and the Government has made people understand that depositing money in banks is safe without the need for much collateral. In addition, when people deposit money, they often base it on the brand, facilities and network of banks nationwide, and pay little attention to how much the total assets of those banks are worth. These factors have made the tangible assets factor have a low impact on employees at Vietnamese commercial banks.
+ The profitability factor also has an inverse effect on financial leverage at the 1% significance level. This is consistent with the pecking order theory, meaning that banks with high profitability tend to use retained earnings to finance their operations rather than using external capital to minimize the cost of capital. It can be said that from 2008 to now, the Vietnamese economy has faced many difficulties, but commercial banks have still maintained a fairly good profit growth rate with the average growth of the top 8 commercial banks being 46% in 2008, 59% in 2009 and 31% in 2010. Studies by Sajid Gul et al. (2012) in Pakistan; Reint Gropp and Florian Heider (2009) in the US and the European Union; Mohammad Amidu in Ghana (2007); Nguyen Hoang Chau (2011) in Vietnam also agrees with the above results.
In summary, the research results have identified factors affecting the CTV of commercial banks in Vietnam, which are bank size, profitability, and assets.
and liquidity. Only the growth opportunity variable has an impact on financial leverage but it is not statistically significant. This meets the research objective and research question.
Chapter 4 Conclusion
From the selected and processed data of 30 commercial banks in Vietnam, the author has tested the regression model of factors affecting bank employees. The research has demonstrated the correlation of those factors with financial leverage and the level of influence of each factor as well as discovered which factor has the dominant impact on bank employees. With the results from the research model obtained: the scale variable has a positive impact on employees; meanwhile, the liquidity variable, tangible assets variable and profitability variable have a negative impact on bank employees. In particular, the growth opportunity factor has no statistical significance. With the research results in this chapter, the author can draw some conclusions about employees of commercial banks in Vietnam in the current period as well as make some recommendations to improve the capital structure of commercial banks, towards building a banking system that operates safely and sustainably.
CHAPTER 5
CONCLUSION AND SOME SUGGESTIONS
5.1. Conclusion
It can be said that a suitable CTV is an important decision for every business not only because of the need to maximize the benefits obtained but also because of the impact of this decision on the business capacity of each business in the current fiercely competitive market. Especially in the banking industry, an industry that has a great influence on the development of the economy. Therefore, bank managers need to have an effective business strategy, building a CTV suitable for the scale of the bank in each period. From the results of quantitative research on factors affecting CTV of commercial banks in Vietnam in the previous chapter, the author draws some conclusions as follows:
+ Commercial banks in Vietnam have a fairly high average debt ratio in their asset structure, specifically for large banks, the financial leverage ratio is often higher than that of small banks. In the period from 2007 to 2011, the financial leverage ratio of commercial banks in Vietnam was an average of 87% and this ratio is increasing over the years. Although this result is quite similar to some studies in the world such as: in banks in developing countries in the Asia region, the average debt ratio is 91.96%, in banks in Pakistan, the ratio is 85.78%, in banks in Ghana, the ratio is 87%, but the ability to use and manage debt of commercial banks in Vietnam is still weak, which has strongly affected the liquidity of banks.
+ The scale factor is calculated by the logarithm of total assets and the results show that the size of the Bank has a positive impact on financial leverage. This is consistent with theories and studies on factors affecting capital at banks and financial companies in countries around the world. This result is also consistent with the current situation of capital at commercial banks in Vietnam.