(Luận văn) the effect of bank capital and ownership structure on bank performance, evidence in vietnam

UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE t to VIETNAM THE NETHERLANDS ng hi ep w n VIETNAM - NETHERLANDS lo ad PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS ju y th yi pl n ua al va n THE EFFECT OF BANK CAPITAL AND ll fu oi m OWNERSHIP STRUCTURE ON BANK at nh PERFORMANCE: EVIDENCE IN VIETNAM z z k jm NGUYEN THI VIET ANH ht vb BY om l.c gm n a Lu n va y te re HO CHI MINH CITY, DECEMBER 2015 VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS t to ng hi ep w n lo ad y th ju THE EFFECT OF BANK CAPITAL AND yi pl ua al OWNERSHIP STRUCTURE ON BANK n PERFORMANCE: EVIDENCE IN VIETNAM n va ll fu o0o oi m at nh Thesis z z ht vb Instructor: Dr Nguyen Thi Thuy Linh jm Student: Nguyen Thi Viet Anh k om l.c gm n a Lu n y te re Ho Chi Minh City, December 2015 va CLASS 20 DECLARATION t to ng I, Nguyen Thi Viet Anh hereby declare that this thesis is my own work under the guidance hi of instructor, Dr Nguyen Thi Thuy Linh It has not yet been presented and will not be ep presented to any similar or other degrees w Date: 2nd December 2015 n lo Signature ad ju y th yi pl Nguyen Thi Viet Anh n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re i ACKNOWLEDGEMENTS t to First and foremost, I would like to express my sincere thanks to my main ng hi supervisor, Dr Nguyen Thi Thuy Linh, for her candid comments, helpful hints and ep valuable scientific guidance during times of deployment, research and completion w of this thesis n lo ad I am greatly indebted to the Board of Directors, the teachers and all staff in y th Vietnam-Netherlands Programme for M.A in Development Economics– VNP, for ju yi their directly teaching, conveying knowledge and experiences as well as supporting pl me and my class-mates necessary information in the last two years n ua al va I express my heartfelt thanks to General Director of Asia Commercial Bank - Mr n Do Minh Toan, the Board of Managers of ACB Saigon Branch – Mr Ngo Tan Long fu ll and Ms Bui Thi Anh Hoa for advice and creation of all favorable conditions for my oi m work to attending VNP at nh z I am grateful to Dr Pham Phu Quoc and Dr Truong Dang Thuy, who suggested z ht vb research topic and gave me enthusiastic guidance in the early stages of writing the k jm concept note and thesis research design gm I greatly express my special thanks to my colleagues at The Center for Corporate om l.c Credit and Financial Institutions – Asia Commercial Bank, ACB Securities Company – ACBS, for supporting me in collecting data; colleagues at ACB - a Lu Saigon Branch, especially Corporate Department, for being always cooperative, n n va enthusiastically supporting and encouraging me ii y Class 20, especially these members, Nguyen Son Kien, Vo Tan Thanh Diep, te re I would like to acknowledge the enthusiastic help of fellow practitioners VNP - Nguyen Le Phuong Linh, Nguyen Phuong Tram and Vu Thi Thuong, for being my close companions during the last two school years t to ng hi Finally, I wish to dedicate this thesis for my family, my parents, siblings, especially ep my dear husband, Nguyen Hoang Than for trust, love, sharing, help, following, encouragement and being always beside me I would also like to thank my lovely w n children, little daughter, Nguyen Hoang Viet Ha and little son, Nguyen Hoang lo ad Quan You are the endless motivation that helps me overcome all difficulties and y th move forward ju yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re iii ABSTRACT t to ng This study aimed at assessing the impact of capital structure and ownership hi structure on Vietnamese bank performance The study used secondary data of forty- ep nine Vietnamese banks with 387 observations in the period 2005-2014, employing w Feasible General Least Square as well as Discoll-Kraay Robust for cross-sectional n lo dependenceestimation Empirical results show that capital structure is significantly ad y th and positively related to Vietnamese bank performance Meanwhile, ownership ju structure impact negatively on profitability of Vietnamese banks (measuring by yi returns on total assets) The findings indicate that the profitability of the Private pl n ua al Banks is higher than the State-owned ones n va Keys words:Bank performance, Capital structure, Ownership structure, Net Interest ll fu Margin, Returns on Assets, Returns on Equity oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re iv TABLE OF CONTENTS t to DECLARATION I ng ACKNOWLEDGEMENTS .II hi ABSTRACT IV ep LIST OF TABLES VIII w LIST OF FIGURES IX n lo LIST OF ABBREVIATIONS X ad y th CHAPTER 1:INTRODUCTION .1 Problem Statement 1.2 Research Objectives .4 ju 1.1 yi pl General research objective 1.2.2 Specific research objectives .5 n ua al 1.2.1 Research questions 1.4 Significances of the study 1.5 Scope of the Study 1.6 Thesis structure n va 1.3 ll fu oi m nh at CHAPTER 2:LITERATURE REVIEW z Introduction 2.2 Conceptual Definitions z 2.1 ht vb jm Capital Structure 2.2.2 Ownership structure 2.2.3 Bank performance l.c Theoretical review 11 om Capital structure theory developed by Modigliani and Miller (MM a Lu 2.3.1 gm 2.3 k 2.2.1 n Model) 11 The trade – off theory 12 2.3.3 Agency cost theory 13 n va 2.3.2 Bank capital structure and Bank performance .14 v y 2.4.1 Empirical review 14 te re 2.4 2.4.2 2.5 Ownership structure and bank performance 17 Conceptual Framework .19 t to CHAPTER 3:RESEARCH METHODOLOGY 20 ng hi ep 3.1 Introduction 20 3.2 scope of Study 20 3.3 Epirical model 21 w n Bank performance measures: 21 3.3.2 The Models 23 lo 3.3.1 ad y th 3.4 Methodology 30 ju The Pooled OLS method 30 3.4.2 The Fixed Effects Model (FEM) .31 3.4.3 The Random Effects Model (REM) 32 3.4.4 Relevant tests to choose the most appropriate estimation method 33 3.4.5 The Feasible Generalized Least Square (FGLS) 34 3.4.6 Discoll-Kraay Robust for cross-sectional dependence – XTSCC 35 3.4.7 Problem of Endogeneity 36 yi 3.4.1 pl n ua al n va ll fu oi m nh FINDINGS AND at CHAPTER 4:EMPIRICAL ANALYSIS z .37 z Introduction 37 4.2 The overview on Vietnamese banks 37 4.3 Descriptive statistics .44 4.4 Empirical results 47 ht vb 4.1 k jm gm Explanatory variables and bank performance 47 4.4.2 Control variables and bank performance 49 om a Lu 4.5 l.c 4.4.1 Robustness test - common panel data methods 50 POLICY IMPLICATIONS Main findings 56 5.2 Policy implications .56 y 5.1 te re .56 n va AND n CHAPTER 5:CONCLUSIONS vi 5.3 Limitation of the study 58 5.4 Suggestions for further studies 58 t to REFERENCES 59 ng hi APPENDIX 69 ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re vii LIST OF TABLES t to ng Table 2-1 – Indirect performance indicators for financial institutions .9 hi Table 3-1 Definitions of variables in equation 3.2 28 ep Table 4-1 Summary statistics for variables 45 w Table 4-2 Correlation 46 n lo Table 4-3 Vif index 46 ad y th Table 4-4 Results from feasible generalized least square (fgls) and discoll-kraay ju robust for cross-sectional dependence (xtscc) 47 yi Table 4-5 Regression result of nim model 51 pl ua al Table 4-6 Regression result of roa model 52 n Table 4-7 The results of f test and breusch – pagan test 53 n va Table 4-8 Hausman test 53 ll fu Table 4.9 Test of heteroskedasticity 54 oi m Table 4.10 Test of autocorrelation 54 at nh z z ht vb k jm om l.c gm n a Lu n va y te re viii APPENDIX B: PANEL REGRESSION MODEL t to B.1 Estimation results of model - NIM Figure B.1.1: The pooled OLS model ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 72 Figure B.1.2: The FEM model t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 73 Figure B.1.3: The REM Model t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 74 Figure B.1.4: The FGLS t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 75 B.2 Estimation results of model - ROA Figure B.2.1: The pooled OLS model t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 76 Figure B.2.2: The FEM Model t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 77 Figure B.2.3: The REM Model t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 78 Figure B.2.4: The FGLS t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 79 APPENDIX C: RESULTS OF BREUSCH – PAGAN LM TEST t to Figure C.1: Breusch – Pagan LM Test for Pooled OLS and REM of model 1NIM ng hi ep w n lo ad ju y th yi pl n ua al va n Figure C.2: Breusch – Pagan LM Test for Pooled OLS and REM of model – ROA ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 80 APPENDIX D: RESULTS OF HAUSMAN TEST t to Figure D.1: Hausman test for FEM and REM of model – NIM ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 81 Figure D.2: Hausman test for FEM and REM of model – ROA t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 82 APPENDIX E: TEST OF HETEROSKEDASTICITY t to Figure E.1: Test of heteroskedasticity of model – NIM ng hi ep w n lo ad ju y th yi pl al n ua Figure E.2: Test of heteroskedasticity of model – ROA n va ll fu oi m at nh z z ht vb k om l.c gm Figure F.1: Test of serial correlation of model – NIM jm APPENDIX F: TEST OF SERIAL CORRELATION n a Lu n va y te re 83 Figure F.2: Test of serial correlation of model – ROA t to ng hi ep w n Figure F.3: Test of serial correlation of model – ROE lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 84 APPENDIX G: ROBUST WITH CROSS-SECTIONAL DEPENDENCE t to Figure G.1: Robust with Cross-sectional dependence of model – NIM ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 85 Figure G.2: Robust with Cross-sectional dependence of model – ROA t to ng hi ep w n lo ad ju y th yi pl n ua al n va ll fu oi m at nh z z ht vb k jm om l.c gm n a Lu n va y te re 86