Information and Communication Technology Adoption and Financial Stability: Empirical Evidence from Vietnamese Commercial Banks

Abstract

The strong digitalization trend in the economy has propelled information and communication technology (ICT) to become an essential element in the operation of the banking industry. This paper investigates the impact of ICT adoption on the financial stability of 30 Vietnamese commercial banks during the period 2005-2022. Using panel data and the SGMM estimation, the findings reveal that increasing the application of ICT contributes to improving banking stability. Additionally, size and equity ratio enhance stability, while higher loan ratio, deposit ratio, and non-interest income ratio are associated with lower stability levels. Macroeconomic factors like economic growth and inflation also show a significant influence on banking stability. The study provides empirical evidence and useful policy implications for bank management in the digital era.