Monetary policy and bank performance: Empirical evidence in Viet Nam

Abstract

This study investigates the impact of monetary policy instruments on the bank performance, with particular attention to the effects observed during the COVID-19 pandemic. Utilizing a panel dataset comprising 27 Vietnamese commercial banks from 2012 to 2022, the study employs the System Generalized Method of Moments (SGMM) for estimation. The empirical findings reveal that increases in the refinancing rate or money supply by the State Bank of Vietnam are associated with a decline in bank performance, and vice versa. Moreover, the adverse effect of a rising refinancing rate on bank performance is more pronounced during the COVID-19 period. The analysis also highlights the significant role of bank-specific characteristics and macroeconomic variables in shaping banking performance.