The Impact of Diversification on Bank Performance: The Role of Human Capital

Abstract

The study was conducted to assess the moderating role of human capital on the impact of diversification on the performance of Vietnamese commercial banks. Diversification is considered from several different aspects, including income diversification, asset diversification, and the level of diversification between on-balance sheet and off-balance sheet items. The SGMM estimation was applied to a dataset of 26 Vietnamese commercial banks from 2008 to 2023. The research results showed that all of the diversification activities and human capital positively impact the bank's performance. Also, human capital positively impacts the relationship between diversification and bank performance. Additionally, the study highlighted the influence of various internal and macroeconomic factors on bank performance. Based on the research results, the paper suggests several policy implications that could enhance the bank's performance in the future.