Factors Affecting Profitability of the Commercial Banks: Empirical Evidence in Vietnam Stock Market

Abstract

This study investigated the factors affecting the profitability of 25 commercial banks listed on the Vietnamese stock market between 2010 and 2021. The findings from quantile regression and PCSEs indicate that bank size, liquidity, and inflation positively impact profitability. In contrast, cost-to-income ratio, financial leverage, economic growth, and credit risk negatively influence the profitability of Vietnamese commercial banks. Based on these results, we suggest several policy implications to improve bank profitability, including increasing size and liquidity, controlling the use of financial leverage, and strengthening loan supervision and cost management. It is important to note that bank profitability is influenced by both internal and external factors, such as the macroeconomic environment, which can impact economic growth and inflation. Therefore, commercial banks must focus on managing internal factors and making appropriate adjustments based on the external macroeconomic situation to increase profitability.