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Factors Affecting the Level of Bank Competition: Empirical Evidence in Vietnamese Commercial Banks

Author

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  • Le Dinh Hac
  • Hoang Nguyen Khai
  • Le Hoang Anh

Abstract

Purpose: There is increasing interest in the trends and requirements associated with improvement in the competition of commercial banks. Many studies have been conducted on this topic in Vietnam as well as in the rest of the world. In the present study, the factors affecting the level of competition in the banking system in Vietnam have been studied. Design/Methodology/Approach: We employ the Bayesian Multilevel Generalized Linear Model to identify the factors affecting the level of competition in the banking system in Vietnam. Findings: The findings show that the eight variables that affect the level of competition in Vietnam commercial banks were identified, including previous-year competition, equity on total assets ratio, loans on total assets ratio, operating expense on the operating income ratio, return on equity, bank size, economic growth, and inflation rate. Moreover, the results demonstrated that during the 2008–2009 crisis, there was a positive relationship between the crisis and the Lerner index. Practical Implications: Based on the research results, we provide policy implications to improve the competitive status of commercial banks in Vietnam. Originality/Value: The results of the present study would serve as a basis for assisting the policy-makers and the other stakeholders to better understand the current state of bank competition and the factors affecting the level of bank competition, which would assist them in formulating strategies and solutions to improve bank competition in Vietnam.

Suggested Citation

  • Le Dinh Hac & Hoang Nguyen Khai & Le Hoang Anh, 2019. "Factors Affecting the Level of Bank Competition: Empirical Evidence in Vietnamese Commercial Banks," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 369-382.
  • Handle: RePEc:ers:ijebaa:v:vii:y:2019:i:4:p:369-382
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    References listed on IDEAS

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    1. Zuzana Fungácová & Laura Solanko & Laurent Weill, 2010. "Market power in the russian banking industry," International Economics, CEPII research center, issue 124, pages 127-146.
    2. Juan Fernández de Guevara & Joaquín Maudos & Francisco Pérez, 2005. "Market Power in European Banking Sectors," Journal of Financial Services Research, Springer;Western Finance Association, vol. 27(2), pages 109-137, April.
    3. Zuzana Fungácová & Laura Solanko & Laurent Weill, 2010. "Market power in the russian banking industry," International Economics, CEPII research center, issue 124, pages 127-146.
    4. repec:zbw:bofitp:2010_003 is not listed on IDEAS
    5. A. P. Lerner, 1934. "The Concept of Monopoly and the Measurement of Monopoly Power," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 1(3), pages 157-175.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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