The impact of macroprudential policies on bank’s profitability: Empirical evidence from Vietnam

Abstract

This paper investigates the impact of macroprudential policies on the profitability of 27 Vietnamese
commercial banks from 2014:Q3 to 2023:Q3. This paper uses panel data regression methods combined with
tests to resolve the endogeneity issue, and robustness checks produce consistent research results. Accordingly,
empirical results show that contractionary macroprudential policies have a positive impact on the profitability
of Vietnamese commercial banks. The results from the quantile regression model indicate that contractionary
macroprudential policies help commercial banks with low ROA quantiles improve profitability better than banks
with high ROA quantiles. Based on that, this research forms several recommendations including: the banks should
conduct appropriate strategies to align to macroprudential regulations; the State Bank of Vietnam is in charge of
the banks in complying to these regulations