The Impact of Internal Control on the Profitability of Commercial Banks in Vietnam

Abstract

The paper examines the impact of internal control on the profitability of commercial banks in Vietnam using the sample of 30 Vietnamese commercial banks over the period 2007-2018. Data is collected from audited financial statements and annual reports of banks while macroeconomic data is collected from the General Department of Statistics. The study uses return on total assets (ROA) and return on equity (ROE) to represent the profitability of commercial banks. By applying the system GMM method (SGMM), the results show that there are four components of the COSO framework (2013) that affect the profitability of banks in Vietnam, including: risk assessment, control activities, information and communication, and monitoring activities. In addition, the study also shows that the characteristics of banks and macroeconomic factors impact on the profitability of commercial banks in Vietnam, including: bank size, number of years of operation, inflation, and GDP growth.