Determinants of Profitability in Vietnamese Commercial Banks

Abstract

The article aims to examine the impacts of internal and external factors on the profitability of Vietnamese commercial banks during the period 2009-2020. Accordingly, bank profitability is measured by return on assets (ROA) as a dependent variable with 9 independent ones, which include micro and macro-economic components. Using balanced panel data, the results show that bank size and equity size are two key internal factors which are positively related to the profitability of commercial banks. Meanwhile, provision for credit risk and operating costs have negative effects on ROA. Other factors have no statistically significant impacts on ROA including income diversification, outstanding loans, liquidity and macro factors such as GDP growth rate and inflation.