The impact of market power on performance: The case of Vietnamese commercial banks

Abstract

This study aims to evaluate the role of market power on the performance of 23 Vietnamese commercial banks from 2010 to 2022. The study uses the Lerner index and ROA as proxies for market power and bank performance, respectively. The estimation results using FGLS regression indicate that banks with greater market power can achieve higher performance than others. Robustness checks also show consistency in the impact of market power on the performance of the banks in the sample. The research findings suggest that increasing scale and expanding market share are key factors to enhance the performance of commercial banks in Vietnam.