Capital Structure and Profitability of Vietnamese Commercial Banks: A Bayesian Approach

Abstract

This study was conducted to assess the impact of capital structure (CTV) on profitability of Vietnamese commercial banks in the period 2012–2020. In this study, the variables representing the capital structure of commercial banks are customer deposits and non-deposit liabilities, which are measured by customer deposits to total assets and non-deposit liabilities to total assets respectively. Using secondary data of 30 Vietnamese commercial banks with Bayesian regression technique via Gibbs sampling algorithm, the results show that customer deposits has a negative impact on the profitability of commercial banks. Meanwhile, non-deposit liabilities has a positive impact on the profitability of commercial banks. In addition, the control variables including bank size, bank loan, and operating costs have positive effects, whereas inflation and GDP growth have negative effects on the profitability of commercial banks in Vietnam.