The Impact of the Credit Macroprudential Policies Instruments on Bank’s Profitability: Empirical Evidence from Vietnam

Abstract

The study examines the impacts of credit macroprudential instruments on the profitability of 27 Vietnamese commercial banks from
2014:Q3 to 2023:Q3. This study uses panel data regression methods combined with tests to resolve the endogeneity issue, and robustness checks produce consistent research results. Accordingly, empirical results show that contractionary credit macroprudential instruments have a positive impact on the profitability of Vietnamese commercial banks. These findings highlight that for the banks with low ROA quantiles, the stricter credit macroprudential instruments improve banks’ profitability better than the banks with higher ROA quantiles. Based on these results, the study offers policy recommendations for Vietnamese commercial banks.