630 factors affecting profitability of joint stock commercial banks listed on the ho chi minh city stock exchange 2023

MINISTRYOF EDUCATIONANDTRAINING STATEBANKOFVIETNAMBANKINGUNIVERSITYHOCHIMINHCITY  NGUYENKHANHDUY FACTORS AFFECTING PROFITABILITY OF JOINTSTOCK COMMERCIAL BANKS LISTED ON THE HOCHIMINHCITY STOCK EXCHANGE GRADUATE THESISMAJOR:F I N A N C E – BANKING CODE:7340201 HOCHI MINHCITY,2022 MINISTRYOF EDUCATIONANDTRAINING STATEBANKOFVIETNAMBANKINGUNIVERSITYHOCHIMINHCITY  NGUYENKHANHDUY FACTORS AFFECTING PROFITABILITY OF JOINTSTOCKCOMMERCIALBANKSLISTEDONTHE HOCHIMINHCITY STOCK EXCHANGE GRADUATE THESISMAJOR:F I N A N C E – BANKING CODE:7340201INSTRUCTOR Ph.D.DUONG THITHUYAN HOCHI MINHCITY,2022 i ABSTRACT The study analyzes the factors affecting the profitability of 14 commercial bankslisted on the Ho Chi Minh City Stock Exchange in the period 2010 - 2020 with dataaccessedfromannualreports,financialstatements,andtheWorldBank.Theprofitability of commercial banks will be measured by variables ROA, and ROE Theindependent variables mentioned in the study include internal variables such as CapitalAdequacy Ratio (CAR), Bank Size (Size), Loan Ratio (LOA), Deposit Ratio (DEP),Liquidity Ratio ( LIQ), Operating Costs Ratio (OPR) and external factors like GrossDomesticProduct(GDP),InflationRate(INF) The results of the regression analysis by the general square method (FGLS) ofthe study show that the capital adequacy ratio, loan ratio, and inflation factors have apositive impact on profitability of commercial banks In contrast, operating cost has anegative impact on profitability, while bank size, deposite ratio, liquidity ratio, andgrossdomestic producthavenostatisticalsignificance Based on the research results found, the thesis makes some recommendations toimprove the profitability of commercial banks in Vietnam as follows: The governmentshouldpromoteeconomicgrowth,therebytocreatefavorablemacroeconomicc onditions, commercial banks should have a roadmap to increase equity capital, raisecredit ratings higher, promote lending along with credit risk management and reduceoperatingcostsofcommercialbanks Keywords:Profitability,commercialbank DECLARATIONOFAUTHENCITY Theauthorherebydeclaresthattheresearchtopic“FactorsAffectingProfitability Of Joint Stock Commercial Banks Listed On The Ho Chi Minh CityStock Exchange ”is the result of the author's own independent research under thescientific guidance of Ph.D Duong Thi Thuy An This thesis is the author's ownresearchwork,theresearchresultsarehonest,inwhichtherearenopreviouslypublished contents or the content made by others except the cited quotations A fullsourceinthethesis HoChiMinhCity,May2022 NguyenKhanhDuy ACKNOWLEDGEMENTS Firstly, I would like to express my thankfulness for Ph.D Duong Thi Thuy Anfor her patience, understanding and support in providing me valuable recommendationsin theprogressofmy study Secondly, Iwould like tothankm y f a m i l y f o r t h e i r support throughout my four years in university, I express my special love and gratitudeto them Lastly, thanks to my classmates for their support throughout the bachelorprogram,valuablediscussionsthroughoutthewholeprocess Author NguyenKhanh Duy TABLEOFCONTENTS ABSTRACT i DECLARATIONOFAUTHENCITY ii ACKNOWLEDGEMENTS iv TABLEOFCONTENTS .v LISTOFTABLES viii LISTOFFIGURES .ix ABBREVIATIONLIST x CHAPTER1:INTRODUCTION 1.1 Theneccessityofthereport .1 1.2 Objectives 1.2.1 OverallObjectives .2 1.2.2SpecificObjective 1.3 ResearchQuestion 1.4 Subjectandthescope 1.4.1 Thesubject 1.4.2 Thescope 1.5 Methodology 1.6 Contribution ofthereport 1.7 TheoreticalBasis CHAPTER2: LITERATUREREVIEW .6 2.1 Literatureonmeasuringtheprofitabilityofcommercialbanks 2.2 Literatureonfactorsaffectingtheprofitabilityofcommercialbanks 2.3 Summaryofpreviousstudies CONCLUSIONOFCHAPTER2 20 CHAPTER3: DATAANDRESEARCHMETHODOLOGY 22 3.1 Data .22 3.2 Research model 23 3.3 Variableselectionandmeasurement 25 3.3.1 Internalfactors: 25 3.3.1.1 CapitalAdequacyRatio(CAR) .25 3.3.1.2 BankSize(SIZE) 26 3.3.1.3 LoanonAsset( L O A ) 27 3.3.1.4 Depositratio(DEP) 27 3.3.1.5 Liquidityratio(LIQ) 28 3.3.1.6 OperatingCosts(OPR) 28 3.3.2.2.Inflationrate(INF) 29 3.4 Research methodology 32 CONCLUSIONOFCHAPTER3 37 CHAPTER4:RESULTS 38 4.1 Descriptivestatisticsofdata 38 4.2 Estimationresultsandregression modeltestingofROA,ROE 46 4.3 Regressionresultsusingfixedeffectsmodel(FEM) 50 4.4 Correctionofmodeldefectsbygeneralsquaresmodel(FGLS) 55