MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY
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THANH HAI STREET
IMPACT OF FINANCIAL STRUCTURE ON PERFORMANCE OF COMMERCIAL BANKS
DOCTORAL THESIS
FINANCE - BANKING INDUSTRY
Hanoi - 2019
MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY
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THANH HAI STREET
IMPACT OF FINANCIAL STRUCTURE ON PERFORMANCE OF COMMERCIAL BANKS
Major: FINANCE - BANKING Code: 9340201
DOCTORAL THESIS
Scientific supervisor: 1. Associate Professor, Dr. LE DUC LU
2. DR. HOANG VIET TRUNG
Hanoi - 2019
COMMITMENT
I have read and understand the academic integrity violations. I declare on my personal honor that this research is my own work and does not violate the requirements of academic integrity.
Hanoi, date month year 2019
PhD student
Thi Thanh Hai Street
INDEX
COMMITMENT i
TABLE OF CONTENTS ii
LIST OF ABBREVIATIONS iv
LIST OF TABLES
LIST OF FIGURES vii
INTRODUCTION 1
CHAPTER 1: OVERVIEW OF RESEARCH ON THE IMPACT OF FINANCIAL STRUCTURE ON THE PERFORMANCE OF COMMERCIAL BANKS 6
1.1. Overview of research on the impact of financial structure on the performance of commercial banks. 6
1.1.1. Viewpoints on the positive impact of financial structure on the performance of commercial banks. 6
1.1.2. Viewpoints on the negative impact of financial structure on the performance of commercial banks. 10
1.1.3. The third school: financial structure is independent of commercial bank performance. 18
1.2. Research Gap 21
Chapter 1 23 Conclusion
CHAPTER 2: THEORETICAL BASIS OF THE IMPACT OF FINANCIAL STRUCTURE ON THE PERFORMANCE OF COMMERCIAL BANKS 24
2.1. Financial structure in commercial banks 24
2.1.1. Characteristics of commercial banks' business operations affect financial structure. 24
2.1.2. Financial structure of commercial banks 28
2.2. Operational efficiency and impact of financial structure on the operational efficiency of commercial banks 33
2.2.1. Concept of operational efficiency of commercial banks 33
2.2.2. Impact of financial structure on the performance of commercial banks 37
Chapter 2 Conclusion 46
CHAPTER 3: RESEARCH METHODOLOGY 47
3.1. Research hypothesis 47
3.2.Research model and proposed variables 51
3.3. Data sources and data collection methods 53
3.3.1. Research data sources 53
3.3.2. Data processing method 56
Chapter 3 Conclusion 58
CHAPTER 4: RESULTS OF EMPIRICAL RESEARCH ON THE IMPACT OF FINANCIAL STRUCTURE ON THE PERFORMANCE OF VIETNAMESE COMMERCIAL BANKS 59
4.1. Overview of Vietnam's commercial banking system 59
4.1.1.The birth and development of the Vietnamese commercial banking system 59
4.1.2. Growth scale of Vietnam's commercial banking system 60
4.2. Analysis of the current financial structure and performance of Vietnamese commercial banks 68
4.2.1. Current status of financial structure of Vietnamese commercial banks 68
4.2.2. Current status of operational efficiency of Vietnamese commercial banks 81
4.3. Analyze the impact of financial structure on the performance of Vietnamese commercial banks studied. 88
4.3.1.Descriptive statistics of data 88
4.3.2. Correlation coefficient matrix 89
4.3.3. Choosing a regression model 91
4.4. Analysis results 104
4.4.1. Summary of results 104
4.4.2. Summary of results achieved: 104
Chapter 4 Conclusion 110
CHAPTER 5: SOME SOLUTIONS AND RECOMMENDATIONS FOR VIETNAMESE COMMERCIAL BANKS 111
5.1. Strategic orientation for the development of Vietnam's banking industry to 2020 111
5.2. Some proposed solutions for commercial banks 113
5.2.1.On general views 113
5.2.2.Some specific solutions 114
5.2.3.Other solutions 120
5.3. Recommendations for the government and the state bank 121
5.4. Limitations of the thesis and future research directions 124
5.4.1. Limitations of the thesis 124
5.4.2. Suggestions for future research directions 126
Chapter 5 Conclusion 127
CONCLUSION 128
LIST OF AUTHOR'S RESEARCH WORKS RELATED TO TOPIC 130
REFERENCES 131
APPENDIX
LIST OF ABBREVIATIONS
Symbol
Interpretation | ||
Vietnamese | English | |
BCĐKT | Balance sheet | |
BCTN | Income Statement | |
CDE | Total customer deposits | Customer deposit |
CIN | Cost to income ratio | Cost to income ratio |
CTTC | Financial structure | |
CTV | Capital structure | |
DN | Business | |
EQA | Financial structure | Equity to total Asset |
EQD | Financial leverage | Equity to liabilities |
EQL | Equity to total loans ratio | Equity to total Loans |
EQS | Equity to total deposits ratio | Equity to customer deposit and Shortterm fundings |
FEM | Fixed effects model | Fixed Effects Model |
GROWTH | Asset growth rate | Asset growth ratio |
HQHD | Operating efficiency | |
KNSL | Profitability | |
LNST | Profit after tax | |
LTD | Loan to deposit ratio | |
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Financial Structure in Commercial Banks
Symbol
Interpretation | ||
Vietnamese | English | |
NIM | Income from interest margin | Net interest margin |
NC | Study | |
NPL | Bad debt ratio | Non performing loan |
NTT | Funding Sources | |
Commercial Bank | Commercial bank | |
MQH | Relationship | |
ROA | Return on total assets | Return on Assets |
ROE | Return on equity | Return on Equity |
REM | Random effects model | Random Effects Model |
Stock Exchange | Stock exchange | |
Stock market | Stock market | |
TS | Asset | |
VCSH | Equity | |
LIST OF TABLES
Table 2.1: Capital structure of commercial banks and enterprises. 30
Table 3.1: Summary of research hypotheses 50
Table 3.2: Description of variables in model 52
Table 3.3: Regression equation 53
Table 3.4: Research bank group 55
Table 4.1: Number of Banks in Vietnam (2008-2016) 60
Table 4.2: Scale and growth rate of assets of Vietnam's commercial banking system 61
Table 4.3: Scale and growth rate of equity capital of Vietnam's commercial banking system 62
Table 4.4: Scale and growth rate of charter capital of Vietnam's commercial banking system 63
Table 4.5: Growth of Vietnam's banking system (2008-2016) 65
Table 4.6: Growth in operational indicators of the entire banking system 67
Table 4.7: Total assets and equity of the group of 19 research banks compared to the Vietnamese commercial banking system 69
Table 4.8: Total assets and equity of the group of 19 researched commercial banks ..71 Table 4.9: Value of EQA of researched commercial banks in the period 2008-2016 72
Table 4.10: Value of EQD of studied commercial banks in the period 2008-2016 74
Table 4.11: Value of EQL of studied commercial banks in the period 2008-2016 75
Table 4.12: EQS of studied commercial banks in the period 2008-2016 77
Table 4.13: Descriptive statistics of EQA, EQD, EQL, EQS ratios in the period 2008-2016 78
Table 4.14: Average EQA, EQD, EQL, EQS of 80 commercial banks
Table 4.15: ROA of Vietnamese commercial banks in the period 2008-2016 82
Table 4.16: ROE of studied commercial banks in the period 2008-2016 83
Table 4.17: Cases of performance of commercial banks (2008-2016) 85
Table 4.18: Descriptive statistics on the performance of Vietnamese commercial banks studied (2008 - 2016) 85
Table 4.19: Average ROA, ROE of Vietnamese commercial banks studied 87
Table 4.20: Description of research variables 88
Table 4.21: Correlation coefficients of variables in model 90
Table 4.22: FEM model results for ROA 92
Table 4.23:REM model results for ROA 93
Table 4.24: Adjusted results for ROA 95
Table 4.25 Summary of regression model results of dependent variable ROA 95
Table 4.26: FEM model results for dependent variable ROE 98
Table 4.27: REM model results for dependent variable ROE 99
Table 4.28: Calibration results for dependent variable ROE 101
Table 4.29: Summary of regression model results for dependent variable ROE 101
Table 4.30: Summary of results 104