In the international integration trend, enhancing the competitive power of Vietnamese financial system in general and Vietnamese commercial banks is an important issue that has begun to be discussed in the second half of the 20th century when the wave of investment capital moves from developed countries to developing countries is flourishing. This paper provides more evidence about the macro and micro factors affecting competitiveness of Vietnamese commercial banks via Lerner ratio. Applying SGMM method of Arellano & Bond (1991) for the panel data from 30 Vietnamese commercial banks in the period 2007-2018, the results show that the factors increasing the competitiveness of the banks are variable LERNER with one-year lag, the capital ratio (CAP), in which the credit loss provision ratio (LLP), inflation rate (INF), bank size (SIZE) have a negative effect on competitiveness.
Cite this paper
Thuy, M. T. P. and Duong, M. B. (2021). Factors Affect Competitiveness of Vietnamese Commercial Banks. Open Access Library Journal, 8, e7692. doi: http://dx.doi.org/10.4236/oalib.1107692.
Kazarenkova. (2006) Methodical and Organizational Approaches to Management of Competitiveness of Bank in the Regional Market of Credit Services for the Population. Finance and Credit, 29, 44-49.
Lerner, A. (1995) The Concept of Monopoly and the Measurement of Monopoly Power. In: Estrin, S. and Marin, A., Eds., Essential Readings in Economics, Palgrave, London. https://doi.org/10.1007/978-1-349-24002-9_4
Nguyen, T.L., Le, A.H. and Tran, D.M. (2018) Bank Competition and Financial Stability: Empirical Evidence in Vietnam. In: Anh, L., Dong, L., Kreinovich, V. and Thach, N., Eds., Econometrics for Financial Applications, ECONVN 2018, Studies in Computational Intelligence, Vol. 760. Springer, Cham.
https://doi.org/10.1007/978-3-319-73150-6_46
Delis, M.D. (2012) Bank Competition, Financial Reform, and Institutions: The Importance of Being Developed. Journal of Development Economics, 97, 450-465.
https://doi.org/10.1016/j.jdeveco.2011.05.012
Tabak, B.M., Fazio, D.M. and Cajueiro, D.O. (2012) The Relationship between Banking Market Competition and Risk-Taking: Do Size and Capitalization Matter? Journal of Banking & Finance, 36, 3366-3381.
https://doi.org/10.1016/j.jbankfin.2012.07.022
Fernandez de Guevara, J., Maudos, J. and Perez, F. (2005) Market Power in European Banking Sectors. Journal of Financial Services Research, 27, 109-137.
https://doi.org/10.1007/s10693-005-6665-z
Arellano, M. and Bover, O. (1995) Another Look at the Instrumental Variable Estimation of Error-Components Models. Journal of Econometrics, 68, 29-51.
https://econpapers.repec.org/RePEc:eee:econom:v:68:y:1995:i:1:p:29-51 https://doi.org/10.1016/0304-4076(94)01642-D