MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM UNIVERSITY BANKING OF HO CHI MINH CITY LE HOANG MINH ANALYSIS THE IMPACT OF NON INTEREST INCOME ON THE PERFORMANCE OF COMMERCIAL BANKS IN VIETN[.]
MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM UNIVERSITY BANKING OF HO CHI MINH CITY LE HOANG MINH ANALYSIS THE IMPACT OF NON-INTEREST INCOME ON THE PERFORMANCE OF COMMERCIAL BANKS IN VIETNAM GRADUATION THESIS MAJOR: BANKING - FINANCE CODE: 7340201 Ho Chi Minh Cỉty, 2022 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM UNIVERSITY BANKING OF HO CHI MINH CITY GRADUATION THESIS MAJOR: BANKING - FINANCE ANALYSIS THE IMPACT OF NON-INTEREST INCOME ON THE PERFORMANCE OF COMMERCIAL BANKS IN VIETNAM NAME : LE HOANG MINH CLASS: HQ06-GE10 ID : 050606180208 Instructor: Dr NGUYEN THE BINH Ho Chi Minh City, 2022 ABSTRACT Increasing operational efficiency is always the top concern of many scientists and bank administrators In addition to income from credit activities, non-interest income activities are receiving more attention by researchers in recent times, especially the direction of their impact on the growth of operating efficiency of banks The commercial banks The fiercely competitive business environment requires bank managers to have new business trends in order to seek profits and increase their operational efficiency Currently, there have been many studies referring to the impact of non-interest income on profitability as well as operational efficiency of commercial banks in the world in general and in Vietnam in particular different conclusions The focus of this article is on determining the impact of non-interest income and other factors related to the performance of Vietnamese commercial banks in the period 2009 - 2021 The study included 26 joint stock commercial banks listed on two major exchanges in Vietnam, HOSE and HNX, with 337 observations The research results show that there are factors that affect and have statistical significance on the bank's performance, including: NNII, EA, DP, SZE, CIR, INF with significance level of 1% In addition, the model also records factors such as NNII, EA, SZE, CIR, INF It also increases the bank's operational efficiency Based on the research results, the article has proposed a few recommendations to help Vietnam's banking industry improve, promote competitiveness, and increase operational efficiency in the future COMMIT My name is: LE HOANG MINH, student of class: HQ06 - GE10, academic year 2018-2022 at Banking University of Ho Chi Minh City HCM Student code: 050606180208 I hereby declare that: This thesis is the author's own research work, the research results are truthful, in which there are no previously published contents or contents made by others except All citations are fully cited in the thesis Ho Chi Minh City, day … month … year 2022 Sign Le Hoang Minh SPECIAL THANKS I would like to express my sincere gratitude to Dr Nguyen The Binh is the guide, he has directly led, spent a lot of time, dedicated guidance, and at the same time gave me extremely valuable comments and suggestions so that I could complete the thesis graduate Next, I would like to thank the teachers for taking the time to impart valuable knowledge during the four years of studying at the school Finally, I would like to thank my family and friends, who have always helped, accompanied and supported me during the writing of this article Best regards ! Le Hoang Minh Table of Contents CHAPTER : INTRODUCTION TO THE TOPIC 1.1 Question 1.2 Research objectives and research questions 1.2.1 Objectives of the study 1.2.1.1 General objective 1.2.1.2 Own goal 1.2.2 Research question 1.3 Objects and scope of research 1.3.1 Research subjects 1.3.2 Research scope 1.4 Research Methods 1.5 New point of the article 1.6 Thoughts of the article 1.7 Article layout CHAPTER 2: THEORETICAL OVERVIEW AND EXPERIMENTAL RESEARCH AND IMPACT OF NON - INTEREST INCOME ON THE OPERATIONAL EFFICIENCY OF THE BANK 2.1 Theoretical basis on the impact of non-interest income on the performance of commercial banks 2.2 General introduction about the performance of commercial banks 2.3 Theoretical basis on the impact of non-interest income on the performance of commercial banks 11 2.4 Review of previous studies on the effects of non-interest income on the performance of commercial banks 14 CHAPTER 3: RESEARCH METHODOLOGY AND RESEARCH MODEL IMPACT ON NON - INTEREST INCOME ON THE OPERATIONAL EFFICIENCY OF THE BANK 21 3.1 Research data 21 3.2 Research Methods 23 3.3 Research model of factors affecting non-interest income of Vietnamese commercial banks 24 3.4 Data processing sequence 28 CHAPTER RESEARCH RESULTS AND DISCUSSION FACTORS IMPACT ON NON - INTEREST INCOME OF VIETNAM COMMERCIAL BANK 30 4.1 Research results 30 4.2 Discuss research results 41 4.2.1 Impact of non-interest income on Average Return on Assets and Return on Equity 41 4.2.2 Effect of equity to total assets on average return on total assets and return on equity 41 4.2.3 Impact of customer deposits on Average Return on Assets and Return on Equity 41 4.2.4 Effect of bank size on average return on assets and return on equity 42 4.2.5 The impact of the cost-to-income ratio on average return on assets and return on equity 42 4.2.6 Impact of lending on total assets on average return on total assets and return on equity 42 4.2.7 Impact of inflation on Average Return on Assets and Return on Equity 43 4.2.8 Impact of growth rate on average return on assets and return on equity 43 CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS 45 5.1 Impact of non-interest income on Vietnamese commercial banks 45 5.2 Policy implications 47 5.3 Limitations of the article 50 List of Tables Table 2.1 Summary table of foreign studies (Source compiled by the author himself) 18 Table 2.2 List of commercial banks in Vietnam 22 Table 3.1 Summary table of variables and signs 25 Table 4.1 Statistical results describe the variables 30 Table 4.2.2 Multicollinearity test results with variance exaggeration factor 32 Table 4.3 Correlation matrix between the variables in the model 33 Table 4.4 Regression model with three models Pool OLS, FEM, REM (ROAA, ROAE) 34 Table 4.5 Pooled OLS and FEM model selection results 36 Table 4.6 Results between FEM and REM models 37 Table 4.7 Pool model selection results OLS and REM 37 Table 4.8 The results of the test of the autocorrelation phenomenon 38 Table 4.9 The phenomenon of variance change test results 38 Table 4.10 The results of model estimation by FGLS method 38 Table 4.11 Summary of research hypotheses and results 40 List of appendices Appendix Data table of calculated criteria from financial statements of 26 Vietnamese commercial banks (2009 - 2021) 55 Appendix Descriptive statistics of variables 63 Appendix Check for multicollinearity 64 Appendix Correlation matrix between the independent variables 64 Appendix Pooled OLS (ROA) Model 65 Appendix Pooled OLS (ROE) Model 65 Appendix FEM Model (ROA) 66 Appendix FEM Model (ROE) 67 Appendix REM Model (ROA) 68 Appendix 10 REM Model (ROE) 69 Appendix 11 Hausman ROA test .70 Appendix 12 Hausman ROE test .71 Appendix 13 Variance error change (ROA) 71 Appendix 14 Variance error change (ROE) 71 Appendix 15 Autocorrelation (ROA) test 72 Appendix 16 Determination of autocorrelation (ROE) 72 Appendix 17 Regression model using FGLS (ROA) 73 Appendix 18 Regression modeling using FGLS (ROE) 74 CHAPTER : INTRODUCTION TO THE TOPIC Introduce In this first chapter, the author will present an overview of the issues related to the research topic, including the reasons for choosing the topic, and the author will also give the research objectives, questions as well as the subject of the study scope, research methods, research content, meaning and structure of the topic With the purpose of providing an overview of the topic, this chapter one will serve as a suitable orientation for the writer and help the reader easily grasp the focus of the whole article 1.1 Question Profit is a phrase that always gets the hearts of many businesses and joint stock commercial banks are no exception The higher the profit, the more effective the bank's business is Normally, for banks, the profit-making income structure of a jointstock commercial bank includes interest income and non-interest income Interest income is the source of income from lending-related activities of the bank Noninterest income is income that does not come from lending activities With the revenues coming from lending, there will always be potential risks or risks if the lending is not effective, leading to the weakening or even bankruptcy of an entire bank The fact has proven through many financial crises in the world On the contrary, if you can diversify your business activities, you can reduce the risks that may occur In fact, many commercial banks in the world have diversified their business in other services besides profit from service business activities to both diversify revenue sources and reduce risks According to the project on restructuring the system of credit institutions 20112015 of the State Bank, there are orientations and solutions for the restructuring of joint stock commercial banks to operate more healthily, safely and effectively One of them mentioned the diversification of banking services, improving the quality of traditional banking services, and developing more modern banking services This is an important point to increase income from external services, reduce dependence and interest income of joint stock commercial banks According to research by Nguyen Thi Hong Minh and Nguyen Thi Canh (2016), income diversification helps increase 1|Page ... about the performance of commercial banks 2.3 Theoretical basis on the impact of non- interest income on the performance of commercial banks 11 2.4 Review of previous studies on the. .. study the impact of factors other than non- interest income on the performance of Vietnamese commercial banks - Make some recommendations on non- interest activities for Vietnamese commercial banks. .. objective The overall objective of the study on the impact of non- interest income on the performance of Vietnamese commercial banks is based on actual data from the financial statements of 26 banks