The relationship between information and communication technology development and banking business performance: A case study of Vietnam’s emerging market

Abstract

The article studies the relationship between information and communication technology development and business performance at 29 Vietnamese commercial banks from 2010 to 2022. Business performance is measured by three indicators: NIM, ROAA, and ROEA. The ICT index, developed by the Ministry of Information and Communications, measures the level of investment in information and communication technology at banks. The S.GMM regression tests and estimation methods are performed on 282-observation panel data. The regression results show that, overall, ICT positively impacts business performance in banking. When considering each aspect of technical infrastructure investment, online services, and internal applications, the results show a negative regression coefficient with NIM, ROAA, and ROEA. The bank-specific control variables and macro factors are included in the research model, and the results obtained have a particular impact on the performance of the banking business. Based on the experimental results, the author recommends that banks should have appropriate investment strategies for information and communication technology development activities by focusing on exploiting and optimizing the efficiency of using available resources instead of continuously incurring new investment costs.