Impact of Technology Investment on Financial Performance of Vietnamese Commercial Banks

Abstract

This study focuses on the impact of technology investment on the financial performance of commercial banks in Vietnam from 2012 to 2022, based on a multivariate regression method with many models and selecting the appropriate model consolidated for research. Results based on the most suitable model (GMM) indicate that technology investments positively influence financial performance by optimizing internal processes and improving the customer experience. Besides, the deposit ratio negatively affects financial performance due to increased capital costs. Loan-to-asset ratio and lousy debt ratio also significantly affect financial performance, with the loan-to-total-assets ratio having a positive impact and the NPL ratio having a negative effect. The results also identify the relationship between economic growth and financial performance, with economic growth often going hand in hand with increased business activities and financial performance. Research results have shown the need to increase investment in technology to optimize processes and customer experience and carefully manage deposit and bad debt ratios to reduce capital costs and improve financial performance.