Mục lục [Ẩn/Hiện]
- Policy Implications
- Increase Ownership Rate For Foreign Investors In Vietnamese Commercial Banks
- Reducing State Ownership Rate In State-Owned Commercial Banks
- There Should Be A Suitable Roadmap In Expanding Foreign Ownership In Vietnamese Commercial Banks
- Strengthening The Law
- Actively Applying Basel Ii Standards
- Improve Management Level, Technology And Quality Of Products And Services
- Creating An Equal Business Environment Among Commercial Banks
- Limitations Of The Topic
- Recommendations For Future Research
First, the author performs regression according to Pooled model to FEM and REM. The result of choosing the most suitable model for this topic is FEM.
The first estimator performed is OLS, and finally the most suitable method is selected, which is GLS. Also fixed the errors of variable variance and autocorrelation.
The most reliable regression model results are as follows:
Y it = α 0i + α 1 GOE it + α 2 FOE it + α 3 IOE it + αk X' it + it
Conclusion Chapter 4
Thus, through the empirical study of Vietnamese commercial banks, we have answered the second research question, "how is the change in ownership structure and business performance of Vietnamese commercial banks over the past time?" ?” and question number 3 is “If ownership structure has an impact on the business performance of Vietnamese commercial banks, then the impact of each factor (State ownership, foreign ownership, ownership of natural persons) on How's the business performance?". The specific results are:
Ownership structure has an impact on the business performance of commercial banks. In there:
- State ownership ratio (GOE) is negatively related to the ratio of return after tax to total assets (ROA). Specifically: In terms of other factors unchanged, at the 99% significance level, when the State ownership rate increases by 1%, the ratio of profit after tax to total assets decreases by 0.403% on average.
Maybe you are interested!
- Ownership structure and business performance of Vietnamese commercial banks - 1
- Ownership structure and business performance of Vietnamese commercial banks - 2
- The Relationship Between Ownership Structure And Business Performance
- Descriptive Statistical Analysis Table 4.4: Sample Descriptive Statistical Results
- Ownership structure and business performance of Vietnamese commercial banks - 6
- Foreign ownership ratio (FOE) has a positive correlation with the ratio of return after tax to total assets (ROA). Specifically: In terms of other factors unchanged, at the 95% significance level, when the foreign ownership ratio increases by 1%, the ratio of profit after tax to total assets increases on average by 0.642%.
- The ratio of natural person ownership (IOE) was not found to correlate with the ratio of return after tax to total assets (ROA).
We have answered 3 research questions, proving that ownership structure has an impact on business performance of Vietnamese commercial banks, knowing specifically the impact of the ratio of each type of ownership. to the rate of return on total assets of Vietnamese commercial banks.
CHAPTER 5: CONCLUSIONS AND POLICY IMPLICATIONS ONLY
This study focuses on studying the role of ownership structure in business performance of Vietnamese commercial banks. Specifically, it studies the impact of three important types of ownership in Vietnamese commercial banks: state ownership, foreign ownership and natural person ownership.
The scale in the study of three types of ownership is: percentage of state capital to total equity of commercial banks (GOE), percentage of foreign capital to total equity of commercial banks ( FOE), the percentage of the natural capital multiplied by the total equity of the commercial bank (IOE). The scale of business performance is the ratio of profit after tax to total assets (ROA).
The research results are as follows:
For state ownership, the study shows evidence of the negative impact of state ownership on business performance of Vietnamese commercial banks. Specifically: In terms of other factors unchanged, at the 99% significance level, when the State ownership rate increases by 1%, the ratio of profit after tax to total assets decreases by 0.403% on average. This result is consistent with the political objective theory of Shleifer and Vishny (1997), Boycko et al. (1996), the agency cost theory of Jensen & Meckling (1976) and empirical studies by such as Barth et al (2004), La Porta et al (2002), Hasan and Marton (2003), Jemric and Vajcic (2002), Weill (2003), Micco et al (2007), Lin and Zhang (2009), Cornett et al (2010). This result may reflect the reality in Vietnam when state-owned commercial banks have to perform a number of political tasks for the Government, not simply business tasks with the goal of maximizing profits. . In addition, due to the incomplete and tight legal system, having state ownership also increases agency costs like developing and emerging countries in Eastern Europe and China.
For foreign ownership, the study shows evidence of the positive impact of foreign ownership on business performance of Vietnamese commercial banks. Specifically: In terms of other factors unchanged, at the 95% significance level, when the foreign ownership ratio increases by 1%, the ratio of profit after tax to total assets increases on average by 0.642%. This result is consistent with the general form of the global advantage theory of Buch (1997), information asymmetry theory of Gillan and Starks (2003) and Ferreira and Matos (2008) and others. The empirical study of Denis and McConnell (2003), Lizal and Svejnar (2003), Mathieson and Schinasi (2000), Claessens et al. (2001), Hasan and Marton (2003), Nikiel and Opiela (2002), Majnoni et al (2003), Demirguc-Kunt and Huizinga (1999), Bonin et al (2005), Micco et al (2007), Berger et al (2008), Rokhim and Susanto (2013), Jemric and Vajcic (2002), Weill (2003), Grigorian and Manole (2006), Yildirim and Philippatos (2007). This result is consistent with emerging market conditions like Vietnam when foreign investors have transferred technology, improved product quality, and enhanced supervision, reducing both operational and agency costs. and ultimately improve business performance.
For private ownership, the author has not found a strong relationship with return on total assets.
5.2. Policy implications
From the research results analyzed above, the study proposes a number of policy implications for managers of commercial banks and state management agencies as follows:
5.2.1. Increase ownership rate for foreign investors in Vietnamese commercial banks
According to the provisions of Decree 01/2014/ND-CP of the Government, the share ownership ratio of a foreign strategic investor must not exceed 20% of the charter capital of a Vietnamese credit institution. Male, and total share ownership ratio
of foreign investors at a domestic credit institution must not exceed 30%.
In order to further improve the business performance of commercial banks, the Government needs to allow the increase of foreign ownership ratio in commercial banks to a maximum of 50%. This is also one of the solutions to increase financial resources for commercial banks in Vietnam and will help the restructuring of the banking system in the next period be more favorable.
As the Vietnamese banking system integrates more deeply, the presence of foreign investors is indispensable. Foreign investors not only contribute capital, but also improve governance skills, transfer technology, enhance information transparency, improve service quality, and improve products. … for Vietnamese commercial banks.
However, at present, many foreign investors do not necessarily see the attractiveness of Vietnamese commercial banks, because the current maximum ownership rate for foreign investors in Vietnam is only 30%. The ownership rate is low, so the right to intervene in the business management process of foreign investors is certainly somewhat limited. Therefore, the reality has shown that there are some cases after a period of capital purchase, foreign investors have divested from Vietnamese commercial banks.
The increase to a maximum of 50% is to ensure that domestic shareholders still control their operations and protect their capital at commercial banks. In fact, there have been cases when foreign shareholders hold more than 50% of the company's shares, with strong financial strength, they find ways to cause difficulties for domestic shareholders, cause information asymmetry, and improve benefits. Foreign shareholders are higher than domestic shareholders, and finally push domestic shareholders out of the business to maximize their benefits. Given the importance of the banking industry, this is extremely dangerous to national economic security.
5.2.2. Reducing state ownership rate in state-owned commercial banks
Decision 986/QD-TT dated August 8, 2018 of the Prime Minister Re: approving
approved the development strategy of the banking industry in Vietnam to 2015, with orientation to 2030, stipulating: In the period of 2018-2020, state-owned commercial banks must ensure a minimum state ownership rate of 65% of the total number of shares available. voting rights; In the period of 2021-2025, state-owned commercial banks will ensure the state ownership rate at 51% (Agribank has its own regulations).
But the model of other countries in the world has very few commercial banks that the State owns as high as Vietnam. Normally, the State only owns development banks and policy banks, while commercial banks are in charge of the private sector. Meanwhile, Vietnam is one of the countries with a high rate of State ownership, there are commercial banks with a state ownership rate of 95% as mentioned above. This does not create flexibility in competition and efficiency in management, so it needs to be researched and reduced further.
The divestment of state capital at commercial banks like the above scheme is difficult to attract many investors because of the long-lasting low ownership rate regulations. The low ownership rate, limited right to intervene in business management, make it unattractive to investors, making divestment difficult, and the divestment share price will not be high.
As the research results show, reducing state ownership will improve the business efficiency of commercial banks. Therefore, the Government should further promote the completion of the law to create a premise for faster divestment and divestment in commercial banks and a lower state ownership rate or no need to hold shares in commercial banks. Thereby, it will improve the business performance of Vietnamese commercial banks.
5.2.3. There should be a suitable roadmap in expanding foreign ownership in Vietnamese commercial banks
The benefits of business performance from increasing foreign ownership in Vietnamese commercial banks have been clarified. However, Vietnam also needs to pay attention to the appropriate implementation to bring the highest efficiency to society.
As we all know, the banking industry is the lifeblood of the economic candle. Every country
Each country has different institutions and development goals, each country has different conditions and resources to develop the country. When Vietnam is in the process of opening up for integration, its economic potential is still weak, the law has not been perfected, and the management level is still weak, Vietnam needs to be careful in every step to develop the country. be comprehensive, not deviating from the set development goals.
When foreign investors occupy important positions in domestic commercial banks, it is likely to affect the policies and operations of the Vietnamese banking industry. This is especially dangerous when the legal system is not yet complete, Vietnam does not exclude the possibility that unrighteous foreign investors will drive the Vietnamese banking industry in a direction that is not in line with Vietnam's development goals. Male. On the other hand, domestic investors are still weak in capital and management skills, if Vietnam rushes to increase the foreign ownership ratio, it will lead to domestic investors not competing again, losing right at home. . Therefore, the Government needs to have a roadmap to increase the foreign ownership ratio appropriately according to the legal conditions and capacity of domestic investors for comprehensive and sustainable social development.
5.2.4. Strengthening the Law
The State needs to step up the improvement of legislation in the banking industry, have strong enough sanctions to deter unrighteous investors, and protect genuine domestic and foreign investors. Strengthen supervision to ensure the healthy operation of the banking industry in accordance with market rules and laws to attract domestic and foreign investors. Pay special attention to the ownership structure of commercial banks, there are regulations on reporting, checking and monitoring regularly on the ownership structure at commercial banks to prevent timely the situation where the ownership structure is skewed towards a group of people who have the same common ground. The benefits that lead to manipulation, credit backyard, and increased agency costs will reduce the business performance of commercial banks, not reflecting reality.
The strengthening of legislation helps the commercial banking system to operate more transparently and safely. Thereby creating confidence, attracting stronger domestic and foreign investors, creating favorable conditions for the divestment of capital at state-owned commercial banks. Besides, it also prevents dishonest investors from causing unsafety to the commercial banking system.
5.2.5. Actively applying Basel II standards
In order to apply Basel II standards, the State Bank of Vietnam issued Circular No. 41/2016/TT-SBV stipulating the capital adequacy ratio for credit institutions (the standard method of Basel II). II) and Circular No. 13/2018/TT-NHNN stipulating the internal control system of commercial banks.
Commercial banks need to actively apply the two Circulars above to catch up with international safety standards. Thereby, it will enhance transparency, reduce risks, and reduce agency costs to attract investors. From there, there will be conditions to improve technology, improve management level and product quality, and finally improve business performance.
Through the application of Basel II standards, it will enhance the value of commercial banks, attract domestic and foreign investors, help state-owned commercial banks to divest more conveniently, and earn more from divestment. In addition, state-owned commercial banks call on foreign investors to be more favorable.
5.2.6. Improve management level, technology and quality of products and services
Management level, technology and product quality are closely related. Having a high level of management will facilitate the application of new and advanced technologies and thereby create higher quality products and services. On the contrary, when the quality of products and services is high, it will have a competitive advantage in the market, earn higher profits, attract more investors, and ultimately create favorable conditions.
favorable return in improving management level and new technology.
Managers of domestic commercial banks need to focus on investing in new technology, conducting training to improve staff qualifications to improve service quality, reduce costs, and minimize risks to be competitive. directly with foreign commercial banks with strong potential in capital, technology and management level. Only then can domestic commercial banks attract many domestic and foreign investors, creating favorable conditions for improving ownership structure and improving business performance.
5.2.7. Creating an equal business environment among commercial banks
The State creates conditions for commercial banks to operate equally within the legal framework according to market principles, limiting intervention by administrative measures. Do not distinguish between state-owned commercial banks and non-state commercial banks. The State does not directly intervene in the business administration of each commercial bank, such as the limit on increase in credit balance, the regulation of interest rates. Giving greater autonomy to state-owned commercial banks, along with strengthening legislation. Thereby creating an equal and safe business environment to attract investors to improve the ownership structure of commercial banks.
5.3. Limitations of the topic
The author conducts the research within the scope of the data collected from many reliable data sources. However, due to objective and subjective conditions, the study has some limitations as follows:
Firstly, because Vietnam has just opened for integration, commercial banks have developed over time in a short time, the number of commercial banks is not much, the reports of commercial banks are not standardized and incomplete, so the collected data sample not big. This has led to the inexplicability of the relationship of some types of ownership (such as natural person ownership, organizational ownership, cross ownership) to operational efficiency.
business of NH.
Second, the ratio of state ownership and foreign ownership is bound by government regulations. When removing binding regulations, foreign ownership and state ownership do not have restrictions anymore, is the regression model still appropriate? This author has not studied.
Third, about the research model, the author uses multiple linear regression model. It is possible that the ownership structure is more suitable for another type of model that the author has not tested.
Fourth, in terms of research, the author has only studied the impact of ownership structure on business performance, is there any effect in the opposite direction? Does business performance have the opposite effect on ownership structure? The author has not clarified in this direction.
5.4. Recommendations for future research
On the basis of the above limitations, the author proposes a number of further research directions in order to strengthen and contribute more to academic and empirical research on the correlation between ownership structure and business performance of commercial banks. Vietnam as follows:
Firstly, the following study continues to update and expand the data sample to improve statistical significance, to find the relationship of other types of ownership with business performance of Vietnamese commercial banks.
Second, when the Government relaxes or removes the constraints on ownership ratio, it is necessary to further study whether the model is still suitable or not.
Third, Continue to study other models to see if they are more suitable? Is the statistical significance of ownership types better?
Fourth, conduct research towards the impact of business efficiency on the ownership structure of Vietnamese commercial banks.
Nguyen Viet Hung (2008). Analysis of factors affecting the performance of commercial banks in Vietnam. Doctoral thesis. National University of Economics.
Tran Ngoc Tho et al (2007). Modern corporate finance. Statistical Publisher (119-143).
Amihud, Y., DeLong, GL, & Saunders, A. (2002). The effects of cross-border bank mergers on bank risk and value. Journal of International Money and Finance, 21(6), 857-877.
Anstoniadis, I., Lazarides, T., & Sarrianides, N. (2010). Ownership and performance in the Greek banking sector. In International Conference on Applied Economics (pp. 11-21).
Barclay, MJ, & Holderness, CG (1991). Negotiated block trades and corporate control. The Journal of Finance, 46(3), 861-878.
Barry, TA, Lepetit, L., & Tarazi, A. (2011). Ownership structure and risk in publicly held and privately owned banks. Journal of Banking & Finance, 35(5), 1327-1340.
Barth, JR, Caprio, G., & Levine, R. (2004). Bank regulation and supervision: what works best?.Journal of Financial Intermediation, 13(2), 205-248.
Berger, AN, Clarke, GR, Cull, R., Klapper, L., & Udell, GF (2005). Corporate governance and bank performance: A joint analysis of the static, selection, and
dynamic effects of domestic, foreign, and state ownership. Journal of Banking & Finance, 29(8), 2179-2221.
Berger, AN, DeYoung, R., Genay, H., & Udell, GF (2000). Globalization of financial institutions: Evidence from cross-border banking performance. Brookings- Wharton papers on financial services, 1, 23-120.
Berger, AN, El Ghoul, S., Guedhami, O., & Roman, RA (2016). Internationalization and banking risks. Management Science.
Berger, AN, Klapper, LF, Peria, MSM, & Zaidi, R. (2008). Bank ownership type and banking relationships. Journal of Financial Intermediation, 17(1), 37-62.
Bonin, JP, Hasan, I., & Wachtel, P. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking & Finance, 29(1), 31-53.
Boycko, M., Shleifer, A., & Vishny, RW (1996). A theory of privacy. The Economic Journal, 309-319.
Breathey, R., Leland, HE, & Pyle, DH (1977). Informational asymmetries, financial structure, and financial intermediation. The Journal of Finance, 32(2), 371-387.
Buch, CM (1997). Opening up for foreign banks: How Central and Eastern Europe can benefit1. Economics of Transition, 5(2), 339-366.
Carvalho, D. (2014). The Real Effects of Government - Owned Banks: Evidence from an Emerging Market. The Journal of Finance, 69(2), 577-609.
Charnes et al (1978), Measuring the Efficiency of Decision Making Units, European Journal of Operational Research, 2 (1978), pp. 429–444;
Chen, Z., Choi, JJ, & Jiang, C. (2008). Private benefits in IPOs: Evidence from state-owned firms. Print AFA 2009 San Francisco Meetings Paper.
Chiang, R., & Venkatesh, PC (1988). Insider holdings and perceptions of information asymmetry: A note. The Journal of Finance, 43(4), 1041-1048.
Choi, JJ, Sami, H., & Zhou, H. (2010). The impacts of state ownership on information asymmetry: Evidence from an emerging market. China Journal of Accounting Research, 3, 13-50.
Claessens, S., Demirguc-Kunt, A., & Huizinga, H. (2001). How does foreign entry affect domestic banking markets?.Journal of Banking & Finance, 25(5), 891-911.
Cornett, MM, Guo, L., Khaksari, S., & Tehranian, H. (2010). The impact of state ownership on performance differences in privately-owned versus state-owned banks: An international comparison. Journal of Financial Intermediation, 19(1), 74-94.
Crystal, JS, Dages, BG, & Goldberg, LS (2002). Has foreign bank entry led to sounder banks in Latin America?.Current Issues in Economics and Finance, 8(1), 1.
Demirguc-Kunt, A., & Huizinga, H. (1999). Determinants of commercial bank interest margins and profitability: some international evidence. The World Bank Economic Review, 13(2), 379-408.
Denis, DK, & McConnell, JJ (2003). International corporate governance. Journal of Financial and Quantitative Analysis, 38(01), 1-36.
Dinc, IS (2005). Politicians and banks: Political influences on government-owned banks in emerging markets. Journal of Financial Economics, 77(2), 453-479.
Draft, I., 2008. Management. South – Western Cengage Learning, 9; 628.
D'Souza, J., Megginson, W., & Nash, R. (2005). Effect of institutional and firm-specific characteristics on post-privatization performance: Evidence developed from countries. Journal of Corporate Finance, 11(5), 747-766.
Dyck, A. (2001). Privatization and corporate governance: Principles, evidence, and future challenges. The World Bank Research Observer, 16(1), 59-84.
Farrell, M., 1957. The measurement of productive effeciency. Journal of the Royal Statistical Society. Series A 9 (General). 120; 253-290.
Ferreira, MA & Matos, P. (2008). The colors of investors' money: The role of institutional investors around the world. Journal of Financial Economics, 88(3), 499–533.
Gillan, S., & Starks, LT (2003). Corporate governance, corporate ownership, and the role of institutional investors: A global perspective. Journal of Applied Finance, 13(2).
Grigorian, DA, & Manole, V. (2006). Determinants of commercial bank performance in transition: an application of data envelopment analysis. Comparative Economic Studies, 48(3), 497-522.
Gursory, G., Aydogan, K. (2002). Equity ownership structure, risk taking, and performance: an emperical investigation in Turkish listed companies. Emerging Markets Finance & Trade, 6-25.
Hasan, I., & Marton, K. (2003). Development and efficiency of the banking sector in a transitional economy: Hungarian experience. Journal of Banking & Finance, 27(12), 2249-2271.
Hearn, B., & Piesse, J. (2013). Firm level governance and institutional determinants of liquidity: Evidence from Sub Saharan Africa. International Review of Financial Analysis, 28, 93-111.
Heflin, F., & Shaw, KW (2000). Blockholder ownership and market liquidity. Journal of Financial and Quantitative Analysis, 35(4), 621-633.
Hope, O, Thomas, WB & Vyas, D 2009, 'Transparency, ownership, and financial constraints: An international study using private firms', Working Paper, Toronto University.
Iannotta, G., Nocera, G., & Sironi, A. (2007). Ownership structure, risk and performance in the European banking industry. Journal of Banking & Finance, 31(7), 2127-2149.
Jemric, I., & Vujicic, B. (2002). Efficiency of banks in Croatia: A DEA approach. Comparative Economic Studies, 44(2-3), 169-193.
Jensen, MC, & Meckling, WH (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305- 360.
Kiruri, RM, & Olkalou, K. (2013). The effects of ownership structure on bank profitable in Keya. European Journal of Management Sciences and Economics, 1(2), 116-127.
La Porta, R., Lopez - de - Silanes, F., & Shleifer, A. (2002). Government ownership of banks. The Journal of Finance, 57(1), 265-301.
Lensink, R., & Naaborg, I. (2007). Does foreign ownership foster bank performance?.Applied Financial Economics, 17(11), 881-885.