Factors affecting profitability of joint stock commercial banks listed on the ho chi minh city stock exchange 2022

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY  NGUYEN KHANH DUY FACTORS AFFECTING PROFITABILITY OF JOINT STOCK COMMERCIAL BANKS LISTED ON THE HO CHI M.

MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY  NGUYEN KHANH DUY FACTORS AFFECTING PROFITABILITY OF JOINT STOCK COMMERCIAL BANKS LISTED ON THE HO CHI MINH CITY STOCK EXCHANGE GRADUATE THESIS MAJOR: FINANCE – BANKING CODE: 7340201 HO CHI MINH CITY, 2022 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM BANKING UNIVERSITY HO CHI MINH CITY  NGUYEN KHANH DUY FACTORS AFFECTING PROFITABILITY OF JOINT STOCK COMMERCIAL BANKS LISTED ON THE HO CHI MINH CITY STOCK EXCHANGE GRADUATE THESIS MAJOR: FINANCE – BANKING CODE: 7340201 INSTRUCTOR Ph.D DUONG THI THUY AN HO CHI MINH CITY, 2022 i i ABSTRACT The study analyzes the factors affecting the profitability of 14 commercial banks listed on the Ho Chi Minh City Stock Exchange in the period 2010 - 2020 with data accessed from annual reports, financial statements, and the World Bank The profitability of commercial banks will be measured by variables ROA, and ROE The independent variables mentioned in the study include internal variables such as Capital Adequacy Ratio (CAR), Bank Size (Size), Loan Ratio (LOA), Deposit Ratio (DEP), Liquidity Ratio ( LIQ), Operating Costs Ratio (OPR) and external factors like Gross Domestic Product (GDP), Inflation Rate (INF) The results of the regression analysis by the general square method (FGLS) of the study show that the capital adequacy ratio, loan ratio, and inflation factors have a positive impact on profitability of commercial banks In contrast, operating cost has a negative impact on profitability, while bank size, deposite ratio, liquidity ratio, and gross domestic product have no statistical significance Based on the research results found, the thesis makes some recommendations to improve the profitability of commercial banks in Vietnam as follows: The government should promote economic growth, thereby to create favorable macroeconomic conditions, commercial banks should have a roadmap to increase equity capital, raise credit ratings higher, promote lending along with credit risk management and reduce operating costs of commercial banks Keywords: Profitability, commercial bank ii DECLARATION OF AUTHENCITY The author hereby declares that the research topic “Factors Affecting Profitability Of Joint Stock Commercial Banks Listed On The Ho Chi Minh City Stock Exchange ” is the result of the author's own independent research under the scientific guidance of Ph.D Duong Thi Thuy An This thesis is the author's own research work, the research results are honest, in which there are no previously published contents or the content made by others except the cited quotations A full source in the thesis Ho Chi Minh City, May 2022 Nguyen Khanh Duy iii iv ACKNOWLEDGEMENTS Firstly, I would like to express my thankfulness for Ph.D Duong Thi Thuy An for her patience, understanding and support in providing me valuable recommendations in the progress of my study Secondly, I would like to thank my family for their support throughout my four years in university, I express my special love and gratitude to them Lastly, thanks to my classmates for their support throughout the bachelor program, valuable discussions throughout the whole process Author Nguyen Khanh Duy v TABLE OF CONTENTS ABSTRACT i DECLARATION OF AUTHENCITY ii ACKNOWLEDGEMENTS iv TABLE OF CONTENTS v LIST OF TABLES viii LIST OF FIGURES .ix ABBREVIATION LIST x CHAPTER 1: INTRODUCTION 1.1 The neccessity of the report 1.2 Objectives 1.2.1 Overall Objectives 1.2.2 Specific Objective 1.3 Research Question 1.4 Subject and the scope 1.4.1 The subject 1.4.2 The scope 1.5 Methodology 1.6 Contribution of the report 1.7 Theoretical Basis CHAPTER 2: LITERATURE REVIEW 2.1 Literature on measuring the profitability of commercial banks vi 2.2 Literature on factors affecting the profitability of commercial banks 2.3 Summary of previous studies CONCLUSION OF CHAPTER 20 CHAPTER 3: DATA AND RESEARCH METHODOLOGY 22 3.1 Data 22 3.2 Research model 23 3.3 Variable selection and measurement 25 3.3.1 Internal factors: 25 3.3.1.1 Capital Adequacy Ratio (CAR) 25 3.3.1.2 Bank Size ( SIZE) 26 3.3.1.3 Loan on Asset (LOA) 27 3.3.1.4 Deposit ratio (DEP) 27 3.3.1.5 Liquidity ratio (LIQ) 28 3.3.1.6 Operating Costs (OPR) 28 3.3.2.2 Inflation rate ( INF) 29 3.4 Research methodology 32 CONCLUSION OF CHAPTER 37 CHAPTER 4: RESULTS 38 4.1 Descriptive statistics of data 38 4.2 Estimation results and regression model testing of ROA, ROE 46 4.3 Regression results using fixed effects model (FEM) 50 4.4 Correction of model defects by general squares model (FGLS) 55 81 ACB 2014 0.005 0.077 0.069 19.006 0.639 0.861 0.014 0.022 0.060 0.041 ACB 2015 0.005 0.080 0.063 19.121 0.658 0.868 0.014 0.020 0.067 0.006 ACB 2016 0.006 0.094 0.060 19.269 0.692 0.886 0.015 0.020 0.062 0.027 ACB 2017 0.007 0.132 0.056 19.466 0.692 0.849 0.017 0.022 0.068 0.035 ACB 2018 0.016 0.244 0.064 19.613 0.692 0.820 0.019 0.020 0.071 0.035 ACB 2019 0.016 0.216 0.072 19.765 0.694 0.803 0.017 0.022 0.070 0.028 ACB 2020 0.017 0.217 0.080 19.913 0.694 0.795 0.016 0.017 0.029 0.032 LPB 2010 0.020 0.166 0.117 17.370 0.279 0.352 0.003 0.015 0.064 0.092 LPB 2011 0.017 0.148 0.117 17.843 0.225 0.457 0.003 0.017 0.062 0.187 LPB 2012 0.013 0.117 0.111 18.011 0.340 0.622 0.003 0.016 0.052 0.091 LPB 2013 0.007 0.078 0.091 18.192 0.364 0.698 0.003 0.015 0.054 0.066 LPB 2014 0.005 0.063 0.073 18.429 0.405 0.772 0.003 0.013 0.060 0.041 LPB 2015 0.003 0.046 0.071 18.494 0.516 0.722 0.004 0.015 0.067 0.006 LPB 2016 0.007 0.128 0.059 18.770 0.555 0.782 0.005 0.014 0.062 0.027 LPB 2017 0.008 0.146 0.057 18.912 0.608 0.785 0.005 0.017 0.068 0.035 LPB 2018 0.005 0.094 0.058 18.981 0.672 0.714 0.010 0.017 0.071 0.035 LPB 2019 0.008 0.127 0.062 19.124 0.687 0.677 0.006 0.020 0.070 0.028 LPB 2020 0.008 0.131 0.059 19.306 0.719 0.720 0.014 0.019 0.029 0.032 MSB 2010 0.010 0.183 0.055 18.563 0.273 0.422 0.008 0.008 0.064 0.092 MSB 2011 0.007 0.084 0.083 18.555 0.327 0.545 0.011 0.011 0.062 0.187 MSB 2012 0.002 0.025 0.083 18.515 0.256 0.542 0.009 0.017 0.052 0.091 MSB 2013 0.003 0.035 0.088 18.489 0.249 0.611 0.010 0.016 0.054 0.066 82 MSB 2014 0.001 0.015 0.091 18.463 0.220 0.606 0.011 0.014 0.060 0.041 MSB 2015 0.001 0.009 0.131 18.463 0.264 0.600 0.015 0.017 0.067 0.006 MSB 2016 0.002 0.010 0.147 18.344 0.374 0.622 0.020 0.020 0.062 0.027 MSB 2017 0.001 0.009 0.122 18.536 0.319 0.506 0.018 0.018 0.068 0.035 MSB 2018 0.006 0.063 0.100 18.741 0.347 0.461 0.017 0.021 0.071 0.035 MSB 2019 0.007 0.070 0.095 18.872 0.399 0.515 0.016 0.016 0.070 0.028 MSB 2020 0.011 0.119 0.096 18.990 0.444 0.495 0.012 0.020 0.029 0.032 APPENDIX RESEARCH RESULTS Descriptive statistics of variables Correlation matrix between variables 83 Fixed-effects model FEM 84 ROA 85 ROE 86 Random Effects Mode (REM) ROA 87 ROE 88 Hausman test results ROA 89 ROE 90 Collin test results ROA 91 ROE 92 Wald test results ROA ROE 93 Wooldridge test results ROA ROE 94 Generalized squared model regression results (FGLS ) ROA 95 ROE ... commercial banks listed on the Ho Chi Minh City Stock Exchange In practical terms, the analysis of the factors affecting the profitability of joint stock commercial banks listed on the Ho Chi Minh Stock. .. of joint stock commercial banks listed on Ho Chi Minh Stock Exchange 3 1.4.2 The scope - Space: The thesis studies the profitability in the period 2010-2020 of 14 banks listed on the Ho Chi Minh. .. on the Ho Chi Minh City Stock Exchange in the period 2010-2020 1.2.2 Specific Objective Determining factors affecting profitability of joint stock commercial banks listed on Ho Chi Minh City Stock