NG CỦA C ẾN SỰ Ổ ỊNH H THỐ T NAM Ố – Ố NG CỦA C ẾN SỰ Ổ ỊNH H THỐ T NAM Ố – Ố NG DẪN KHOA H C i i n n y nh h ng s nh tr nh n s n nh h th ng ng n h ng ho r h i k t qu ng hi u nh u th (i) nh h ng t h s.
- ẾN SỰ Ổ NG CỦA C H THỐ T NAM Ố – Ố ỊNH ẾN SỰ Ổ NG CỦA C H THỐ T NAM Ố – Ố NG DẪN KHOA H C ỊNH i i n n y nh h ng ho r h i k t qu ng s nh tr nh hi u nh u tr nh ng ti u m l h th ng t i h nh l ộng l nh n r i ro ho nh tr nh th th tr ng t h s th nh h y l m gi t ng lu n v i m ng ng n h ng i t m so v i ộng h th ng ng n h ng ẩy s s l m gi t ng r i ro ho t ộng t i kh tri n (ii) ph n t h t nh ng gi i o n ph t tri n li u s ẩy ho t ộng n ng n h ng n th (i) nh h hi u qu ho t ộng (ii) nh h i t ns nh tr nh ns h nh vi h p ti u l (i) o l th tr n nh ng m ộ ng ng n h ng ph t nh h th ng ng n h ng i t Nam h n t h h i quy qu t ( o n )v 9– u r ng m ng s th ng nh n r i ro m i tr hi n ng nh ph o t i h nh h im i t ộ c nh tr nh ( i t Nam th p h n so v i ng n h ng i t tr nh th p (ng ý ng o l ng nh nh t t ng i ng n h ng gi i ol ng b ng s – 2020 Boone) t i th tr tr ng ph p li u thu th p t t qu nghi n o n ng ph m s ng rong gi i nh i u ki n nh ng n h ng) v gi t ng h nh vi h p o v trung nh tr nh g y g t nh tr nh kh ng l nh m nh gi ph t tri n m ho t ộng n ng gi nh tr nh qu n nh t qu ph h p v i th ns m t n nh v s xu t ii ABSTRACT Currently, the impact of competition on the stability of the banking system, produces two opposite results Specifically, (i) the positive impact will promote operational efficiency; (ii) negative impact will increase operational risk Vietnam is a financial system in the developing stage, whether competition is the driving force behind stable operations or increases risk – taking behaviors for banks The aim of the thesis is to (i) measure the competitiveness of Vietnam's banking market compared to developed banking markets; (ii) analyze the impact of competition on the stability of the Vietnam banking system Regression analysis using FGLS (Feasible Generalized Least Squares) estimation method estimation method and data collected from financial statements of twenty-three banks for the period 2009-2020 The results show that the level of competition (measured by Boone index) in the Vietnam’s nk market is lower than in developed countries During the period 2009 - 2020, Vietnam banks operate stably in low competition conditions (implying collusion between banks), and increasing risk-taking behavior in highly competitive environment and average The results are consistent with the Vietnam market, when fierce competition easily leads to instability because of the appearance of unfair competition iii FULL ABSTRACT IN ENGLISH The banking system plays a key role in providing capital and effectively allocating financial resources to those in need Besides functions as credit intermediaries, payment intermediaries, and money generators, banks are also the environment for implementing monetary policy of the Central Bank However, the banking system is also a channel of instability to other sectors of the economy when there is a fluctuation in the payment mechanism in the interbank market as well as a decrease in the credit supply due to sudden investor flight or deposit freeze This caused a prolonged crisis, which took a lot of time and cost to overcome the financial crisis, along with a sense of apprehension, no longer trusting the customer's bank, the first step in mobilizing depositing or issuing debt instruments is very difficult for banks Therefore, the stability of the bank is always a top priority in the banking activities, especially after the global financial crisis of 2007 – 2009, academics and policymakers place much pay attention to the factors affecting the stability of the banking system One of the factors that can lead to the instability of the banking system is competition because it has a close relationship with the risk-taking behavior of banks Because banks are also a for-profit business, it is understandable that despite providing subprime credit to attract customers This happens in an environment where there is a lack of management, strict supervision or operational safety policies are not really guaranteed However, competition can also be the driving force to improve operational efficiency, develop financial products, and increase access to finance to serve customers How to balance and maintain an industry system with both healthy competition and stability in banking operations is a matter of much debate In fact, at present, scholars who have conducted research on many areas at different stages give two views on competition (i) competition negatively affects the stability of the system banking (Keeley, 1990; Sauders and Wilson, 1996; Hellman iv et al., 2000; Allen and Gale, 2000; Besanko and Thakor, 2004; Berger et al., 2008; rletti n ives ung čov et l guyen Du ruong u Anh and Nguyen Thi Thanh Binh, 2018); (ii) competition positively affects the stability of the banking system (Boyd et al., 2006; De Nicolo and Loukoianova, 2007; Uhde n eimeshoff k et l and Dang Buu Kiem, 2016) h e k n ih k 13 o Xu n inh ere y the topi “The impact of competition on the stability of the banking system in Vietnam” provides one more empirical evidence on the effects of competition Necessary recommendations and recommendations as reference information for policy makers when studying the effects of competition The graduate thesis conducts research on the above topic with the following research questions: the first question, does competition affect the stability of the banking system in Vietnam?; the second question, how is the impact of competition on the stability of the banking system in Vietnam?; the third question, what policy implications should be implemented to increase the stability of the Vietnam banking system through competition? In which, the research object is the impact of competition on the stability of the Vietnam banking system and the research period is from 2009 to 2020 Observations at the firm-year level that not have enough variables of interest will be excluded from the data set Therefore, the final dataset is an unbalanced panel data consisting of 243 firm – level observations of 23 banks The thesis uses quantitative research method, collects data samples of 23 commercial banks in Vietnam in the period from 2009 to 2020 The thesis uses Stata 13 to run the regression by Pooled OLS method, Random effects method (REM), Fixed effects method (FEM) and Feasible generalized least squares method (FGLS) The results of the model will be tested and compared to find a suitable method through testing the phenomenon of multicollinearity, autocorrelation and variance of variance, thereby providing an analysis of the impact of competition to the stability of the Vietnam banking system In addition, the graduate thesis uses Stochastic frontier analysis method (SFA) to determine the dependent variable v The graduate thesis uses Boone index to (i) analyze the competition in Vietnam banking market in the period of 2009 – 2020; (ii) separate year-to-year analysis to track changes in the level of competition in this industry (In which, the more negative the Boone index, the more competitive the banking market is.) This index is then used as an independent variable representing competition to analyze the impact of competition on the stability of the Vietnam banking system According to Boone (2008), the Boone index is measured by the regression coefficient beta, , in the following equation: ( ) ( ) (1) Where: is the market share of bank i in the loan market, MC is the marginal cost and is the Boone index, which measures the competitiveness of the Vietnam banking market during the research period (from 2009 to 2020) According to Tabak et al (2012), the larger the value of , the lower the competition because the characteristic of this index is negative, that is, the bank with the smaller marginal cost, the higher the profit Next, in order to clearly see the change in the level of competition over the years of the Vietnam banking market, the graduate thesis will separate each year to find the Boone index in equation (2) Thus, in equation (2), there will be 12 Boone indexes from 2009 to 2020 ( ) ∑ ( ) (2) However, marginal costs cannot be directly calculated (Schaeck and Cihak, 2010; Leuvensteijin et al., 2011), research thesis using the method of Berger et al (2009); Beck et al (2012) to determine this cost In it, suppose a bank generates total assets (Q) from three inputs namely cost of deposits ( ( ), and cost of labor ( ) ), cost of physical assets vi ∑ ] (3) In which, the coefficients are estimated from the following equation: ∑ ∑ ∑ ∑ (4) The graduate thesis uses the Stochastic frontier analysis method (SFA) to measure the stability of the Vietnam banking system (inheriting the study of author Fang et al., 2011 ∑ ( ) ( ) ( ) ∑ ∑ ∑ ( ) ( ) (5) Where, Z is Z-score, other income, is total loan, is total deposit, is other assets, is the ratio of interest expense to total deposit , is is the ratio of wages to total assets, STABILITY represents the stability of bank i at time t To determine the relationship between competition and stability, according to Tabak (2012), the graduate thesis uses the following equation: (6) In which, STABLITY represents the stability determined from equation (2), BOONE is the variable opposite to the Boone index ( ) (Because is inversely proportional to competition, used the opposite variable to be proportional vii to competition); CAP represents the ratio of equity to total assets; LIQ measures the ratio of liquid assets to total assets, which is a measure of liquidity risk; SIZE is calculated using the natural logarithm of total assets; LLP represents the loan risk provision ratio; GDP reflects economic growth and INF measures the rate of inflation; PRI is a dummy variable showing that the bank does not have a state equity ratio Besides, the graduate thesis wants to classify the competition levels more clearly, so it has added dummy variables to replace Boone such as: HIGHCOMP ( ̅̅̅̅̅̅̅̅̅̅ ), AVGCOMP (< ̅̅̅̅̅̅̅̅̅̅ ), LOWCOMP ( ̅̅̅̅̅̅̅̅̅̅ ̅̅̅̅̅̅̅̅̅̅ ) The graduate thesis answers the first research question when performing a regression with the main independent variable Boone index (BOONE) giving the results that competition has an impact on the stability of the Vietnam banking system Suitable for statistical significance level 1%, which is determined to have the opposite effect Specifically, the ietn m’s banking system operates less stably in a competitive environment In addition, the graduate thesis that measures the level of competition over each year of the banking market tends to decrease (the Boone index increases gradually), which is also a supportive sign for the research results on the impact of the banking industry The opposite effect of competition to stability, this implies that banks should cooperate, link and support each other in the process of operation for more stable development However, the graduate thesis does not completely refuse the other point of view because competition is the driving force for Vietnam’s banks to operate more efficiently and to increase quality financial products to serve customers and contribute to the development of the economy The graduate thesis answers the second research question that the banking system in Vietnam supports the view that when competition is too fierce, it will negatively affect the stability of the banking system (Berger et al., 2009) With viii further analysis related to the level of competition, the graduate thesis finds that banks operating in high and medium competitive environments are less stable than in low competition markets In addition, the thesis research performs regression along with related variables such as: Loan provision ratio (LLP), Equity to total assets (CAP), Bank size (SIZE), Liquidity Risk (LIQ), Economic Growth Rate (GDP), Inflation Rate (INF), Non-State Equity Bank (PRI) Through the regression results by the FGLS method, the graduate thesis identifies statistically significant variables, in which: Loan provision ratio (LLP), Equity ratio (CAP) and Banks without State Equity (PRI) have the positively impact on the stability of Vietnam's banking system In contrast, the Inflation rate (INF) negatively affects the stability of the banking system The graduate thesis answers the third question related to policy implications In this abstract, the graduate thesis focuses on the implications of competition policy, the graduate thesis implies that: First, when making competition policy, it is necessary to consider the characteristics of the industry; Second, there should be a smooth coordination between competition policy and safety regulations in banking operations; Third, create policies to encourage banks to diversify products, reduce competitive pressure on traditional products; Fourth, review and minimize barriers to entry into the industry, creating conditions for banks with financial potential, professional capacity and governance to participate in the market to create competition in positive conversion direction; Fifth, continuously monitor and promptly intervene when there are distortions in the market during the restructuring period, handle weak banks related to increasing bad debts; Sixth, the SBV strengthens regular inspection and supervision to ensure that the system is stable, competitively healthy and developed sustainably; Seventh, banks should avoid focusing on providing credit in a certain fields to prevent risks and spread of crisis in the system Eighthly, the managers and executives of commercial banks must xlv ả ả – HIGHCOMP T pc c iả S xlvi ả – HIGHCOMP T pc c iả S xlvii ả FEM/ REM – HIGHCOMP T ả – pc c iả S HIGHCOMP T pc c iả S 3 xlviii ả – HIGHCOMP T ả – pc c iả S HIGHCOMP T pc c iả S xlix PH : Ế – Ế AVGCOMP ả – AVGCOMP T pc c iả S l ả ả – AVGCOMP T pc c iả S li ả – AVGCOMP T pc c iả S lii ả FEM/ REM – AVGCOMP T ả – pc c iả S AVGCOMP T pc c iả S 3 liii ả – AVGCOMP T ả – pc c iả S AVGCOMP liv T PH : Ế pc – c iả Stata 13 Ế LOWCOMP ả – LOWCOMP T pc c iả S lv ả ả – LOWCOMP T pc c iả S lvi ả – LOWCOMP T pc c iả S lvii ả FEM/ REM – LOWCOMP T ả – pc c iả S LOWCOMP T pc c iả S 3 lviii ả – LOWCOMP T ả – pc c iả S LOWCOMP lix T pc c iả S ... p th m ng l r ng h ng th khuy n ngh v nh ho h nh h nh s h nh tr nh m qu os nh h t i ? ?Tác động cạnh tranh đến xu t nh tr nh v ho t ộng qu n lý gi m s t ho NHTM guy n h e k v u l ph n t h t ng... v oukoi nov xu t ần thi t l m th ng tin th m kh o ho nghi n es nko v ives n ổn định hệ thống ngân hàng Việt Nam? ?? ung nghi m v le Anh v ộng s ặng B u Ki m, 2016) u tr n nhi u khu v nh tr nh (i)... measure the competitiveness of Vietnam's banking market compared to developed banking markets; (ii) analyze the impact of competition on the stability of the Vietnam banking system Regression analysis