IMPACT OF INCOME DIVERSIFICATION ON BUSINESS PERFORMANCE OF VIETNAM COMMERCIAL BANKS

Abstract

Commercial banks’ financial services to customers are also revenuegenerating services for them. Therefore, in order to increase business performance, commercial banks must strengthen their provision of financial services to consumers, thereby boosting the bank’s income. However, expanding financial services offered to consumers in order to raise income does not imply that commercial banks would enhance their business efficiency. On the contrary, it might potentially impair commercial banks’ efficiency, as shown in several worldwide research studies. In recent years, the growth of financial services in Vietnam has grabbed the attention of commercial banks and produced extremely beneficial outcomes, allowing commercial banks to not only rapidly generate income but better satisfy the demands of clients in the economy. However, in terms of efficiency, it has fallen short of expectations, as seen by the comparatively low ROA or ROE coefficients when compared to commercial banks in other nations.

This paper provides empirical evidence on the impact of income diversification on the  business performance of Vietnamese commercial banks from 2010 to 2020.