The Impact of Technology Investment on the Operational Performance of Commercial Banks in Vietnam

Abstract

Purpose: The study aims to assess the impact of technology investment (TI) on the operational performance (OP) of 22 Vietnamese joint-stock commercial banks (JSCBs) during the period 2014–2023.
Research Design/Methodology/Approach: Diagnostic tests indicate that the Random Effects Model (REM) is the most appropriate compared to the Pooled OLS and Fixed Effects Model (FEM). Therefore, the REM is employed along with the Feasible Generalized Least Squares (FGLS) regression method to address autocorrelation and heteroskedasticity, ensuring the reliability and robustness of the estimation results.
Main Findings: The results show that technology investment exerts a positive and statistically significant effect on bank performance through several channels, including process automation, expansion of electronic payment services, reduction of operating costs, enhanced transparency, and strengthened customer confidence. In addition, bank size and loan ratio have a positive influence on performance, whereas deposit ratio and fixed assets exhibit a negative impact.
Originality/Value: This study contributes by applying diverse measurement indicators and robust estimation techniques to enhance result validity, while providing new quantitative evidence within the Vietnamese context on the relationship between technology investment and bank performance. Accordingly, it offers policy implications to help commercial banks formulate more effective and sustainable technology investment strategies.