Factors affecting income diversification in Vietnam commercial banks

Abstract

The development of financial market along with the drastic change of digital technology is strongly changing the banking sector, the competition between domestic and foreign banks is increasingly fierce, forcing banks to diversify to increase competitiveness, minimize risks by spreading risks in many different areas. The authors use audited financial statements and annual reports of 27 commercial banks in the period 2008-2022 to evaluate the factors affecting income diversification, applying panel data regression model with generalized least squares (GLS) method to overcome the phenomenon of heteroscedasticity and autocorrelation in the research model, using Stata 17 software to calculate and process data. The results show that the cost/income ratio index has a negative correlation, the bank size (SIZE) has a positive correlation, while ROA, CAR, GDP growth rate and inflation rate have no statistical significance in affecting income diversification of Vietnamese commercial banks.