The effect of corporate governance and non interest income on Vietnamese banks’ financial performance

Abstract

The roles of non-interest income and corporate governance on bank operations in the literature have not been a cooperative explanation. Therefore, the paper determines corporate governance and non interest income on the Vietnamese banks' financial performance from 2011 to 2021. SYS-GMM demonstrates that non-interest income, fees, and other income enriches Vietnamese commercial bank’s financial performance. Regarding bank corporate governance, the board size, CEO ownership, state ownership, and foreign ownership negatively impact ROA and ROE. Conversely, the number of female boards, board ownership, and board compositions enhances the banks' financial performance. The interesting judgment is the corporate governance factors will lessen the intensity of the effect of non-interest income and its components on the banks’ financial performance. The paper proposed some implications for optimizing corporate governance (board characteristics and ownership structure) and increasing non-interest income to improve Vietnamese commercial banks’ financial performance.