Macroeconomic policy and its significance on the profitability of Joint Stock Commercial Banks in Vietnam
Keywords:
Joint stock commercial banks: Profitability, Factors affecting; Return on Asset : Independent variable, dependent variable. , macroeconomic policiesAbstract
By clarifying the factors affecting the profitability of commercial banks, the article highlights the role and relationship between the macroeconomic policies of the Government and the Central bank on operations of the national banking system.
This study is based on data analysis of 30 Vietnamese joint stock commercial banks from 2005 to 2022. In addition, information on macroeconomic factors was collected from the World Bank website (WB). The article focuses on quantitative research methods including financial coefficient analysis and multivariate regression with data tables to identify factors affecting the profits of Vietnamese commercial banks. At the same time, apply static panel data regression model, dynamic panel data regression model and random effects model (REM) to consider factors affecting profits.
Research results show that the profitability of commercial banks is measured by the dependent variable: return on assets (ROA) and 5 factors affecting the profitability of stock trading banks in Vietnam. These are bank size, non-interest income, operating costs, financial leverage and economic growth.
Not only does it make an academic contribution, the article also has practical significance, helping the banking system operate more effectively through appropriate macroeconomic policies of the Government and the State Bank together with the correct business strategies of the Bank's Board of Directors. On the other hand, the study suggests that creative flexibility to create profitable factors for banks is to increase bank scale. If banks themselves do not have enough capital according to regulations, they can voluntarily merge with each other to increase the size of their charter capital. Thanks to that, not only is the banking system healthier, but the bank's business operations are also more efficient and profitable.
The limitation in this study is that it only uses two factors: economic growth and inflation rate. In reality, in addition to these two factors, there are other macro factors that can affect the profits of commercial banks such as business environment, fiscal policy, financial policy, and legal regulations.