The impact of digital transformation on credit risk of commercial banks in Vietnam

Tóm tắt

In Vietnam, digital transformation has been considered as the leading strat
egy of commercial banks, especially in terms of credit risks. Therefore, they
must identify how their digital transformation affects their credit risks to
maintain effective operation and steady growth in a complex and chang
ing market environment. Our study takes 29 commercial banks in Vietnam
from 2014 to 2022 as the research object to test the impact of bank digital
transformation on credit risk. In particular, the level of digital transforma
tion of banks is measured by the ICT Index. The ICT Index is the official
measure that evaluates the level of information technology application na
tionwide each year, with separate indicators for ministries and branches.
Banks in Vietnam also use the ICT Index to assess their readiness and abil
ity to apply information technology in the digital transformation process.
Various regression models including Pooled Ordinary Least Squares (OLS),
Fixed Effects Model (FEM), Random Effects Model (REM), Generalized Least
Squares (GLS) are applied using STATA 17. Research results show that credit
risk is affected by 5 factors: the information technology development and
application readiness index (ICT Index), inflation rate (INF), return on equity
(ROE), loans to customers (LOAN), and operational diversification (NIIC).
On that basis, the study proposes recommendations for commercial banks
to promote their digital transformation process. In addition, the state and
policymakers also have appropriate measures to promote digital transfor
mation in the Vietnamese banking system.