THE IMPACT OF NON-NET INTEREST INCOME ON FINANCIAL EFFICIENCY OF VIETNAMESE COMMERCIAL BANKS

Abstract

Banks benefit mainly from traditional activities of credit, but credit contains many risks because banks are in a passive position when extending credit to customers. When diversifying types of services and expanding non interest business activities, banks will use thoroughly and effectively the technical facilities and staff of each bank, This will reduce administrative costs, operating costs and increase the maximum profit for the bank. This article uses data from the financial statements of 32 Vietnamese commercial banks and the General Statistics Office of Vietnam in the period of 2008 - 2019 to study the impact of non-net interest income on the bank's financial efficiency with the following criteria: profit after tax on total average assets, profit after tax on average equity, net interest margin through generalized method of moments model. The research’s results show that non-net interest income has a positive effect on profit after tax on total average assets, profit after tax on average equity but has a negative impact on net interest margin, thereby proposing solutions to diversify non interest business activities to improve the financial efficiency of Vietnamese commercial banks.