The Impact of Human Capital on Financial Stability in Vietnamese Commercial Banks

Abstract

Human resources have been recognized as a potential capital source for enterprises, especially in the era of knowledge-based development. The banking sector is a critical part of the economy and demands a high-quality workforce. This study is based on data from 28 commercial banks in Vietnam during the period from 2008 to 2023. It employs the System Generalized Method of Moments (SGMM) regression technique to analyze the impact of human capital on banking stability in Vietnam. The research results show that human capital has a positive effect on banking stability in Vietnam. However, there is a nonlinear relationship. The impact of the interaction between human capital and diversification indicates that human capital should be invested across various areas. Over-concentration in credit-related activities may reduce its effectiveness. Moreover, the study reveals that state ownership and digital transformation exert a positive influence on bank stability, whereas financial leverage and bank size have a negative impact. Based on these findings, the study proposes policy implications for commercial banks in Vietnam to operate more stably in the future.