The impact of digitalization on the credit performance of commercial banks in Vietnam

Abstract

In the context of the Fourth Industrial Revolution, banks are undergoing a strong digital transformation across all activities to enhance operational efficiency. In the credit activities, digital transformation contributes to expanding customer access, automating credit processes, and improving risk management efficiency. This study applies regression models OLS, FEM, REM, FGLS to analyze the impact of digitalization (via ICT index) on credit performance, focus on credit growth and credit risk, using a panel data set collected from the 20 largest commercial banks in Vietnam from 2011 to 2023. The results show that digital transformation has no impact on credit risk but has a positive impact on credit growth. The study has further confirmed the impact of technology transformation on bank credit performance, serving as a foundation for commercial banks and regulatory agencies’ decisions to accelerate the digitalization in the credit activities.