The Impact of Diversification and Competition on the Stability of Commercial Banks: A Study in Vietnam

rarroa1

0.368246	0.0489756	6.66	0.001	0.0689607	0.2619398
rdiv	1,96541	0.0037285	3.36	0.000	0.0063522	0.0210435
size	-0.157462	0.0934976	-1.76	0.021	-0.5614147	-0.1930055
growth	-0.00636	0.0662526	-0.10	0.346	-0.067938	0.1931178
loans	0.36725	0.6591744	0.69	0.643	-1.605033	0.9923168
deposits	-0.305169	0.8678732	-0.42	0.342	-0.8833694	2,536318
ggdp	0.246157	0.0951899	0.03	0.149	0.0007496	0.375827
inf	-3.59624	0.0103316	-3.97	0.000	-0.0046933	0.0360163
_cons	4.047135	2,235898	2.47	0.061	1.942506	10.75263
sigma_u	1.65416
sigma_e	0.84680306
Rho	0.79235191	(fraction of variance due to u_i)

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F test that all u_i=0 F (27, 264) = 3.34 Prob > F = 0.0000

Modified Wald test for groupwise heteroskedasticity in fixed effect regression model

H 0 : sigma(i)^2 = sigma^2 for all i chi2 (28) = 105.79

Prob>chi2 = 0.0000

GLS estimation method

Estimated covariances

=	28	Number of obs	=	300
Estimated autocorrelations	=	0	Number of groups	=	28
Estimated coefficients	=	10	Obs per group	=	8
			avg	=	10,71429
			max	=	11
			Wald chi2 (9)	=	1620.80
Log likelihood	=	-355.8327	Prob > chi2	=	0.0000

rarroa

Coef.	Std. Err.	z	P> IzI	[95% Conf. Interval]
rarroa1	0.867157	0.0392705	34.14	0.000	0.4622427	0.6161803
rdiv	1.591436	0.0023984	3.39	0.000	0.0084422	0.0178437
size	0.064523	0.0622383	1.31	0.951	-0.1258478	0.1181219
growth	-0.159234	0.0537557	-3.04	0.000	-0.0382528	0.1724656
loans	0.481028	0.3128406	1.49	0.514	1.017925	2,244237

deposits

-0.236421	2,957615	-0.34	0.714	-6.882003	4.711634
ggdp	18,17259	0.0763546	2.24	0.034	0.1793165	0.4786212
inf	-1.344268	0.0081065	-1.76	0.069	0.0286131	0.0603901
_cons	-2.28101	3.274149	-2.49	0.017	-8.054126	4,780301

Appendix A5: Model to measure the impact of income diversification on banking stability of Vietnamese commercial banks: Variable RAR ROE

Multicollinearity test:

Variable

VIF	1/VIF
rare1	1.09	0.917505
rdiv	1.24	0.804245
size	1.72	0.580869
growth	1.29	0.773984
loans	1.13	0.883215
deposits	1.41	0.711624
ggdp	1.31	0.762319
inf	1.30	0.771867
Mean VIF	1.31

FEM estimation method

Fixed - effects (within) regression

Number of obs	=	300
Group variable: unit	Number of groups	=	28
R-sq: within = 0.3148	Obs per group: min	=	8
between = 0.1400	avg	=	10.7
overall = 0.2349	max	=	11
	F (9, 271)	=	14.05
corr(u_i, Xb) = 0.3040	Prob > F	=	0.0000

rare

Coef.	Std. Err.	t	P> ІtІ	[95% Conf. Interval]
rare1	0.366149	0.0574367	6.59	0.000	0.1086127	0.3349309
rdiv	1,233005	0.0039548	1.87	0.083	0.0088542	0.0244372
size	0.221056	0.0991924	2.27	0.065	-0.6546058	-0.2637574

growth

0.208153	0.0682018	2.95	0.000	-0.0191877	0.2495485
loans	0.051102	0.6962392	0.08	0.263	-2.113568	0.6298283
deposits	-1.957256	0.9202408	-2.38	0.026	-5.075612	-1.449581
ggdp	7,878263	0.1009913	0.77	0.172	-0.060563	0.3373738
inf	-4.37234	0.0110692	-4.29	0.000	-0.0046163	0.0389999
_cons	-1.530186	2,373306	-0.87	0.268	8,353813	17,70537
sigma_u	0.80253622
sigma_e	0.89788955
Rho	0.44409963	(fraction of variance due to u_i)

F test that all u_i=0 F (27, 264) = 2.72 Prob > F = 0.0000

Modified Wald test for groupwise heteroskedasticity in fixed effect regression model

H 0 : sigma(i)^2 = sigma^2 for all i chi2 (28) = 102.28

Prob>chi2 = 0.0000

GLS estimation method

Estimated covariances

=	28	Number of obs	=	300
Estimated autocorrelations	=	0	Number of groups	=	28
Estimated coefficients	=	10	Obs per group	=	8
			avg	=	10,71429
			max	=	11
			Wald chi2 (9)	=	365.29
Log likelihood	=	-391.6391	Prob > chi2	=	0.0000

rare

Coef.	Std. Err.	z	P> IzI	[95% Conf. Interval]
rare1	0.632015	0.0472303	14.91	0.000	0.4677937	0.6529331
rdiv	1.13505	0.0033712	2.13	0.021	0.0108422	0.0240569
size	0.084325	0.0658974	1.41	0.691	-0.3883026	-0.1299895
growth	0.202163	0.0594984	3.49	0.047	0.0013548	0.2345842
loans	0.812357	0.4148513	2.17	0.036	-0.7479449	0.8782422
deposits	0.61753	0.8084385	0.59	0.825	-4.718311	-1.549291
ggdp	16.07254	0.0953299	1.70	0.032	0.0621626	0.435849
inf	-2.911086	0.0099029	-3.26	0.000	0.0015645	0.040383

_cons

-2.927237

1,705393

-2.81

0.000

3.889441

10,57446

APPENDIX B: MODEL TO MEASURE THE IMPACT OF COMPETITION ON BANKING STABILITY OF VIETNAMESE COMMERCIAL BANKS

Appendix B1: Model for measuring the impact of competition on banking stability of Vietnamese commercial banks: Z-Score variable

Multicollinearity test:

Variable

VIF	1/VIF
zscore1	1.40	0.715115
learner	1.18	0.844523
size	1.61	0.619246
growth	1.57	0.635599
loans	1.18	0.849424
deposits	1.44	0.693671
ggdp	1.21	0.806804
inf	1.30	0.770054
Mean VIF	1.36

FEM estimation method

Fixed - effects (within) regression

Number of obs	=	300
Group variable: unit	Number of groups	=	28
R-sq: within = 0.8615	Obs per group: min	=	8
between = 0.0032	avg	=	10.7
overall = 0.2521	max	=	11
	F (9, 271)	=	27.34
corr(u_i, Xb) = -0.2695	Prob > F	=	0.0000

zscore

Coef.	Std. Err.	t	P> ІtІ	[95% Conf. Interval]
zscoret1	0.282153	0.0266846	5.35	0.000	0.0052452	0.110393
learner	-22.24356	0.0404398	-0.82	0.990	-0.0801618	0.079187
lerner2	13,15429	0.0000473	1.09	0.901	-0.0000873	0.0000991
size	-6.29543	0.4556373	-8.24	0.000	-0.5008852	1,294506

growth

-2.942183	0.4040945	-4.53	0.000	-0.4356508	1,156641
loans	7,38142	3.039675	1.65	0.128	-1.350623	10,6269
deposits	2,204368	4,020167	0.36	0.183	32,16299	48.00404
ggdp	-82.7426	0.4533873	-1.16	0.372	-0.4879054	1.29862
inf	4,91952	0.0447744	0.65	0.276	-0.0393477	0.1370811
_cons	139,2038	10,49158	5.77	0.000	-67.57158	-26.23061
sigma_u	10.42386
sigma_e	6.5399214
Rho	0.71755068	(fraction of variance due to u_i)

F test that all u_i=0 F (27, 264) = 6.31 Prob > F = 0.0000

Modified Wald test for groupwise heteroskedasticity in fixed effect regression model

H 0 : sigma(i)^2 = sigma^2 for all i chi2 (28) = 85194.44

Prob>chi2 = 0.0000

GLS estimation method

Estimated covariances

=	28	Number of obs	=	300
Estimated autocorrelations	=	0	Number of groups	=	28
Estimated coefficients	=	10	Obs per group	=	8
			avg	=	10,71429
			max	=	11
			Wald chi2 (9)	=	1477.44
Log likelihood	= -913.709		Prob > chi2	=	0.0000

zscore

Coef.	Std. Err.	z	P> IzI	[95% Conf. Interval]
zscoret1	0.648253	0.0161229	23.67	0.000	0.05471	0.1179107
learner	-17.182356	0.0115473	-1.25	0.000	-0.0777068	-0.0324422
lerner2	2.572413	0.0000296	0.44	0.150	-0.0000154	0.0001005
size	-1.299531	0.163374	-4.49	0.000	-0.9840303	-0.3436161
growth	-3.54423	0.2343369	-9.26	0.475	-0.6267659	0.2918181
loans	4.77325	0.8945587	2.80	0.000	-1.618001	1,888605
deposits	-76.40234	39.07006	-10.40	0.000	-63.2753	89.87653
ggdp	58.24469	0.2015068	1.56	0.191	-0.0547395	0.7351526

inf

-10,000	0.0169166	-2.75	0.001	0.0228455	0.0891573
_cons	34,12036	39,2691	3.23	0.000	-77.71618	76.21588

GMM Estimation Method

Arellano – Bond dynamic panel-data estimation Number of obs = 273

Group variable: donvi Time variable: year

Number of instruments = 27

Two-step results

Number of groups

Obs per group min

avg max

Wald chi2 (9) Prob > chi2

= 28

= 7

= 9.75

= 10

= 51517.28

= 0.0000

zscore

Coef.	Std. Err.	z	P> IzI	[95% Conf. Interval]
zscoret1
L1.	-0.213054	0.0152486	-5.07	0.000	-0.1333174	-0.0735441
learner	-26.0206	0.0183862	-0.77	0.000	-0.0900756	-0.0180031
lerner2	7,39325	0.000023	0.46	0.001	0.0000291	0.0001194
size	-10.3258	0.4908278	-9.62	0.000	-2.477744	-0.5537348
growth	-0.521089	0.2486565	1.56	0.586	0.5799513	1.554667
loans	17,0205	2.592051	2.64	0.000	3.462219	13.62287
deposits	21.223475	0.8340538	5.19	0.000	40,08543	43.35486
ggdp	-127.6203	0.1548993	-7.18	0.001	-0.8299219	-0.2227279
inf	1.820349	0.0128925	3.53	0.000	0.0738748	0.1244123
_cons	176,9846	9.267469	5.66	0.000	-23.63373	12.69409

Instruments for first differences equation

GMM-type (missing=0, separate instruments for each period unless collapsed) L(1/11).(zscore lerner lerner2 size growth loans deposits ggdp inf)

Instruments for levels equation

GMM-type (missing=0, separate instruments for each period unless collapsed) D.(zscore lerner lerner2 size growth loans deposits ggdp inf)

-------------------------------------------------- ----------------------------

Arellano-Bond test for AR(1) in first differences: z = -5.58 Pr > z = 0.000

Arellano-Bond test for AR(2) in first differences: z = 1.50 Pr > z = 0.834

-------------------------------------------------- ----------------------------

Sargan test of overriding. restrictions: chi2(277) = 262.10 Prob > chi2 = 0.831 (Not robust, but not weakened by many instruments.)

Difference-in-Sargan tests of exogeneity of instrument subsets: GMM instruments for levels

Sargan test excluding group: chi2(230) = 153.70 Prob > chi2 = 0.853 Difference (null H = exogenous): chi2(47) = 46.69 Prob > chi2 = 0.002

APPENDIX B: MODEL TO MEASURE THE IMPACT OF COMPETITION ON BANKING STABILITY OF VIETNAMESE COMMERCIAL BANKS

Appendix B2: Model for measuring the impact of competition on banking stability of Vietnamese commercial banks: ROA variable

Multicollinearity test:

Variable

VIF	1/VIF
roa1	1.13	0.881130
learner	1.18	0.849990
size	1.72	0.582389
growth	1.30	0.769748
loans	1.14	0.879498
deposits	1.46	0.683371
ggdp	1.29	0.778099
inf	1.39	0.719982
Mean VIF	1.33

FEM estimation method

Fixed - effects (within) regression

Number of obs	=	320
Group variable: unit	Number of groups	=	28
R-sq: within = 0.6267	Obs per group: min	=	8
between = 0.5533	avg	=	11.4
overall = 0.6041	max	=	12
	F (9, 271)	=	13.26

corr(u_i, Xb) = -0.1735 Prob > F = 0.0000

roll

Coef.	Std. Err.	t	P> ІtІ	[95% Conf. Interval]
roa1	0.226123	0.0409786	4.53	0.001	0.0589758	0.2204478
learner	-0.00453	0.0000455	-0.19	0.000	-0.0003533	-0.0001742
lerner2	0.001672	5.31e-08	0.16	0.000	1.08e-07	3.17e-07
size	-0.001491	0.0005148	-2.61	0.083	-0.0019119	0.0001165
growth	0.000556	0.000383	1.28	0.429	0.0004037	0.001913
loans	0.005673	0.0034354	1.43	0.502	-0.0090767	0.0044601
deposits	-,012862	0.0045415	-2.47	0.031	-0.0096983	0.008197
ggdp	0.05932	0.0004989	0.94	0.186	-0.0001231	0.0018425
inf	-0.015924	0.0000523	-2.37	0.045	2.27e-06	0.0002084
_cons	0.014921	0.0118535	2.16	0.032	-0.000558	0.0461493
sigma_u	0.00305259
sigma_e	0.00590049
Rho	0.2111363	(fraction of variance due to u_i)