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Government Ability, Bank-Specific Factors and Profitability - An insight from banking sector of Vietnam

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  • Nguyen, V.C.
  • Nguyen, Thu Thuy
  • Nguyen, Huu Tinh

Abstract

To the best of our knowledge, a very few studies have focused on the effects of government ability on bank performance in developing and emerging countries. The aim of this work is to study the impact of government ability, bank-specific factors on profitability in the banking system in Vietnam. Using a panel data analysis in the period over 2014-2018, the study analyzes based on the methods of fixed, random effects, and pooled ordinary least squares. Data were collected from Vietnam’s Stock Exchange, General Statistics Office, and Worldwide Governance Indicators. Our results demonstrate that government ability has negatively affected bank efficiency while economic growth will not affect bank efficiency. In addition, the prime bank-specific factors that can significantly impact on bank efficiency are non-performing loan, loan-to-deposit ratio, loan loss reserves. A bank with a higher loan-to-deposit ratio can positively impact on the probability of a bank. In contrast to the risk, a bank with a greater risk as well as a higher level in non-performing loan in operation will negatively impact on its efficiency.

Suggested Citation

  • Nguyen, V.C. & Nguyen, Thu Thuy & Nguyen, Huu Tinh, 2020. "Government Ability, Bank-Specific Factors and Profitability - An insight from banking sector of Vietnam," OSF Preprints 9dcqp, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:9dcqp
    DOI: 10.31219/osf.io/9dcqp
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    1. Bui, Thi Tam & Vu, T.T.H. & Le, Q.H. & Pham, Trong Luong & Nguyen, T.M.A. & Luu, T.D. & Le, Thi Thuy An & Nguyen, V.C., 2020. "Application of Project-based Learning for Primary Teachers - A New Direction in Professional Training at Pedagogical Universities and Colleges in Vietnam," OSF Preprints xg8tp, Center for Open Science.
    2. Nguyen, Thu Thuy & Tran, T.N. & Nguyen, V.C., 2020. "Oil price shocks against stock return of oil- and gas-related firms in the economic depression: A new evidence from a copula approach," OSF Preprints 4cm7b, Center for Open Science.
    3. Thu Thuy Nguyen & Van Chien Nguyen, 2021. "Financial Development and Renewables in Southeast Asian Countries—The Role of Organic Waste Materials," Sustainability, MDPI, vol. 13(16), pages 1-18, August.
    4. Sulaeman Rahman Nidar & Mokhamad Anwar & Ratna Komara & Layyinaturrobaniyah Layyinaturrobaniyah, 2020. "Determinant of regional development bank efficiency for their sustainability issues," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 1133-1145, September.

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