Factors Affecting Net Interest Margin of Commercial Banks in Vietnam

Abstract

The article analyzes the factors influencing Vietnamese commercial banks’ Net Interest Margin (NIM) from 2009 to 2021. Based on data from 27 commercial banks in Vietnam with 324 observations, the article employs Feasible Generalized Least Squares (FGLS) to derive the final results. The FGLS model reveals that operating costs (OC), equity capital (CAP), loan-to-deposit ratio (LDR), bank size (SIZE), and inflation (INF) have a positive impact on NIM. In contrast, management efficiency (QM) and economic growth rate (GDPR) harm NIM. This article contributes to understanding the factors influencing the NIM of the banking industry in Vietnam and provides helpful information for bank managers to optimize NIM.