Tóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt Nam

Tóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt NamTóm tắt: Nghiên cứu tác động của thu nhập ngoài lãi đến hiệu quả hoạt động của các Ngân hàng thương mại tại Việt Nam

PHAN THI THU HANG

INVESTIGATION ON IMPACTS OF NON-INTEREST INCOME ON THE OPERATING EFFICIENCY OF

COMMERCIAL BANKS IN VIETNAM

SUMMARY OF DOCTORAL DISSERTATION ON

ECONOMICS

HO CHI MINH CITY - 2024

PHAN THI THU HANG

INVESTIGATION ON IMPACTS OF NON-INTEREST INCOME ON THE OPERATING EFFICIENCY OF

COMMERCIAL BANKS IN VIETNAM

SUMMARY OF DOCTORAL DISSERTATION ON

ECONOMICS

Major: Finance – Banking Code: 9340201

Scientific Instructor: Assoc Prof Dr Phan Dien Vy

HO CHI MINH CITY - 2024

CHAPTER 1: INTRODUCTION 1.1 Rationale

Operational Efficiency (OE) is always put on the top priority of all Commercial Banks (CBs) In order to successfully survive and develop, efficiency must be obtained by the business operations of any enterprise, including CBs Bank income is known as a metrics that reflects the CBs’ operating efficiency Currently, CBs’ incomes are originated from interest and non-interest income However, in reality, evidences from CBs’ financial statements unveiled that the banks’ main income is still interest income with a high proportion over the years

Specifically, in the report on SBV’s socio-economic development plan and banking activities in the first quarter of 2023, income from CBs’ credit activities accounted for 79.6% of CBVs’ total income However, with the SBV ceiling-oriented credit growth limit in recent years and in the coming time, interest rates are gradually being reformed towards the market In addition, if traditional credit operations are only focused, CBs will be subject to myriad of risks and serious challenges prior to the economic instability, increasingly cut-throat competition and high pressure to well adapt with impacts of the industrial revolution 4.0

In that context, transformation to well adapt with modern trends and transforming CBs’ income structure are inevitable Recently, changes in income structure have been made by gradually reducing interest income proportion and actively increasing the proportion of non-interest operating income such as service, investment, security, brokerage, consultancy services, etc With the expansion of non-traditional activities, CBs can disperse and reduce risks, promote competition in a broader market segment, and earn income from more and higher sources

One of the contents of the credit institution restructuring project approved by the Prime Minister under the Decision No 254/QD-TTg dated March 1, 2012 is that “Step by step shift the business model of commercial banks towards reducing the dependence on credit services and increasing income from non-credit services”, until now CB have always pursued this goal has been always pursued by CBs This unveiled that more attention is gradually paid to non-interest income generating activities According to the author's compiled source on income structure of listed Vietnamese CB groups, the proportion of non-interest income against total income tended

to grow by years, namely from 22.7%, 24.5% and 26.3% in 2015, 2016 and 2018 to 31.9% in

2022 Therefore, increase in non-interest income is gradually becoming an important strategy and recognized with a great impact on CBs’ OE

Theoretically, increasing the non-interest income ratio may generate a more stable source

of operating income for banks, thereby improving risk-adjusted business efficiency (Odesanmi and Wolfe, 2007) Alternatively, Chiorazzo et al (2008) and Baele et al (2007) also assumed that increasing non-interest income will increase OE for banks, particularly, large banks would

be subject to stronger impacts For Vietnamese CBs, the studies released by Le Long Hau & Pham Xuan Quynh (2016) and Nguyen Minh Sang & Nguyen Thi Thuy Trang (2018) or Van Thi Thai Thu (2022) revealed that non-interest income ratio increase will has a positive impact

on Vietnamese CBs’ profitability However, this was not completely supported by some empirical studies The studies launched by Delpachitra and Lester (2013), Lepetit, Nys, Rous, and Tarazi (2008), Li and Zhang (2013), Maudos (2017), and Williams (2016) assumed that non-interest income increases risks incurred by CBs The studies on relationship between non-interest income and profitability of banks such as those carried out by Edirisuriya et al (2015) also showed that non-interest income is disadvantageous for banks to increase their profits Alternatively, the studies on Indian banking system in the period of 2003-2013 conducted by Singh and colleagues (2016) revealed that non-interest income has a negative relationship with both revenue and risk

Therefore, the empirical studies released inconsistent results on non-interest income and

OE correlation, this impact may be varied by the national conditions and development of the financial system and research phase Moreover, evidences of non-interest income impacts on OE were mostly found by the studies, an almost neglected issue was recognized, that is, the channel

of non-interest income impact channel on OE Specifically, non-interest income affected which aspects of commercial banking operations, on which aspects of commercial banking operations have promoted OE

For the reasons of the aforesaid issues, the topic “Investigation on impact of

non-interest income on the operating efficiency of commercial banks in Vietnam” is selected as

the author’s study to learn about the impact of non-interest income on Vietnamese CBs’ OE in the current period

In order to fulfill the overall objective, the thesis has the following specific goals:

- Identify and measure factors affecting non-interest income of Vietnamese CBs

- Evaluate non-interest income impacts on Vietnamese CBs’ OE

- Recommend the implications of non-interest income improvement policies to ensure the operating performance of Vietnamese CBs

In order to achieve the research objectives, following research questions are answered by the thesis:

- What are non-interest income and its affecting factors of Vietnamese CBs?

- How does non-interest income impact OE of Vietnamese CBs?

- What are the policy implications to improve non-interest income to ensure the operating

efficiency of Vietnamese CBs?

1.4 Research subjects and scope

The selected research subject is non-interest income impact on OE of Vietnamese CBs Scope of research space: The research data was taken from audited financial statements of

32 Vietnamese CBs It excluded joint venture CBs, foreign bank branches and 100% foreign investment CBs Vietnam's macroeconomic indicators were taken from the General Statistics Office of Vietnam and the World Bank

Scope of research time: Data was collected from 2012 to 2022

1.5 Research methods

To determine the impact of the non-interest income ratio on Vietnamese CBs’ OE, regression methods were applied for table data, in which Pooled - OLS, FEM, REM, SGMM were commonly used regression methods In addition, the model’s validity was also verified by the author through Bayesian analysis

1.6 Contributions of the thesis

v Argurments

The main findings summarized theories on factors affecting interest income and interest income impacts on CBs’ OE According to the theory, this study has provided the empirical evidence on non-interest income impacts on CBs’ OE in the research context of a developing country, Vietnam Non-interest income impact channel on CBs’ OE was also specified hereof Particularly, non-interest income and its components have shown a positive impact on increasing asset efficiency, while non-interest income generating activities also increased costs However, increase is insignificant against that of asset utilization efficiency Some non-interest income activities were also even recognized with impact on reducing interest expenses and similar expenses incurred by CBs As a result, non-interest income has contributed

non-to increasing CBs’ OE This new result has contributed non-to a more comprehensive supplement non-to the research stream on non-interest income and its impact on CBs’ OE

v Methods

According to data taken from 32 Vietnamese CBs in the period of 2012 - 2022, the author has evaluated the factors affecting non-interest income and its impact on CBs’ OE by using quantitative research methods and Stata 17.0 software The author's inferences on research hypotheses were based on modeling estimation results, using SGMM method of Blundell and Bond (1998), to overcome the endogeneity phenomenon that often occurs in macroeconomic models Furthermore, to obtain really reliable results, Bayes method was combined to determine the probability of hypotheses occurring

v Practice

The main findings will help planners determine the positive and negative impacts of factors affecting non-interest income and its impacton CBs’ OE, thereby putting forward some possible policies to promote positive factors, control and change negative factors to facilitate non-interest income growth, thereby increasing CBs’ OE

Specifically, the author's proposals aim to improve the rate of non-interest income and increase the operational efficiency of commercial banks in Vietnam such as: increasing

the rate of customer deposits, reducing and limiting Processing bad debts arising at commercial banks, increasing the ratio of equity capital, expanding the scale of commercial banks' operations, diversifying income, focusing on developing service products non-credit services, diversifying product utilities, improving service quality, focusing on developing new services to attract bank customers, building and developing modern technology, improving High professional level of staff.1.6 Thesis structure

The thesis is structured into 5 chapters, namely:

CHAPTER 2: LITERATURE REVIEW ON NON-INTEREST INCOME IMPACTS

ON THE COMMERCIAL BANKS’ OPERATING EFFICIENCY 2.1 Overview about banks’ operating efficiency

2.1.1 Concepts

CBs’ OE may be construed as the ability to transform inputs into outputs or profitability

or minimize costs to increase competitiveness with other financial institutions (System Theory) Another expression of such term was released by Berger and Mester (1997) that CBs’ OE is reflected in revenue and cost relationship of using resources or ability to turn input resources into the best outputs in business operations CBs’ OE may be interpreted under three directions as follows: Firstly, minimizing costs, that is, using the least amount of inputs such as capital, facilities, and labor, etc to create the same outputs as before; Secondly, maintaining the same inputs but generating more outputs; Thirdly, using more inputs, provided that generated outputs amount increases faster than that of inputs

2.1.2 Measurement method

2.1.2.1 How to use financial indicators

Group of indicators, reflecting profitability

Group of indicators, reflecting business OE Group of indicators, reflecting financial risks 2.1.2.2 Marginal efficiency analysis method

A commonly used method in the non-parametric approach is Data Envelopment Analysis (DEA), which is an increasingly popular method to measure the operating efficiency in modern commercial banks (Grigorian, 2002)

2.2 Non-interest income

2.2.1 Concept

CBs’ income is divided into 2 types: Interest income and non-interest income, including: Firstly, interest income is income originated from credit activities such as lending interest income, discount interest income, financial lease interest income, guarantee operations, etc Secondly, non-interest income refers to income originated from non-credit activities, including service

charge collection (payment, treasury, trust, consultancy services, etc.), revenue from other activities: interest on capital contributions and share purchases; securities trading income; forex exchange revenue; Revenue from debt trading and other extraordinary revenues, etc

2.2.2 Measurement method

In order to measure the contribution of interest activities, ratio of each source of interest income to total operating income was applied According to Chiorazzo et al., (2008), Busch and Kick (2009), Le Long Hau and Pham Xuan Quynh (2017), non-interest income was based on three components, namely commercial income - (COM), trading and investment income

non (TRAD), other nonnon interest income non (OTH), specifically:

ICOCOM = COM/(NET+NON) ICOTRAD = TRAD/(NET+NON) ICOOTH = OTH/(NET+NON) ICONON = ICOCOM + ICOTRAD + ICOOTH

Where:

ICONON is the ratio of net non-interest income;

ICOCOM is the ratio of net income from service activities;

ICOTRAD is the ratio of net income from business and investment activities ICOOTH is the ratio of net income from other non-interest activities

NON is net non-interest income;

NET is net interest income

If all non-interest net income is found with a negative value during ICONON variable is calculated, it will be considered that ICONON = 0%, the bank’s income will not be diversified (Nguyen Thi Canh et al., 2015)

In addition, DeYoung & Rice (2004) revealed that non-interest income is measured by proportion of non-interest income to total assets as follows:

Ratio of non-interest income/total assets = non-interest income/total average assets

This ratio reflected how much non-interest income a dollar of average asset value of a commercial bank will generate during the period The higher this indicator was, the better scale and efficiency of that CBs’ non-credit service activities would be and vice versa

2.2.3 The role of non-interest income

Non-interest income reduces dependence on interest income, enhancing banks' competitiveness by providing new products and services, thereby attracting and retaining customers At the same time, Non-interest income also helps improve ROA and ROE ratios, which are two important indicators to evaluate a bank's operating efficiency and profitability Non-interest income plays an important role in ensuring the stability and sustainable development

of commercial banks, thereby contributing to overall economic growth

2.2.4 Factors affecting non-interest income

Factors affecting non-interest income included external factors such as economic growth, inflation and interest rates and internal factors of the bank such as the bank’s capital structure, bank size, loan balance, customer’s deposit ratio, income diversification, and technology investment, etc

2.3 Non-interest income impacts on commercial bank’s operating efficiency

The study launched by DeYoung and Roland (2001) proposed three reasons why interest income can increase the volatility of bank earnings First, although most bank loans were subject to credit risk and interest rate fluctuations, loan interest income may be less volatile than non-interest income from fee-based activities Second, the lending operations were characterized

non-by main costs, i.e., interest costs, while the fee-based products and services were mainly included with fixed or semi-fixed costs (labor costs), requiring higher operating leverage than that of traditional credit activities Third, as little or no fixed assets are required to hold by the most fee-based operations, fee-based operations can use higher financial leverage than that of credit operations

Besides, the Studies initiated by Delpachitra and Lester (2013), Lepetit, Nys, Rous, and Tarazi (2008), Li and Zhang (2013), Maudos (2017), and Williams (2016) assumed that non-interest income increases risks incurred by CBs The studies on the banks’ non-interest income and profitability relation such as the studies conducted by Edirisuriya et al (2015), Singh et al (2016) or Limei Sun, Siqin Wu, Zili Zhu and Alec Stephenson (2017) also demonstrated that non-interest income is not favor to the banks to increase their profits

According to Stiroh and Rumble (2006), no remarkable correlation was found between

non-interest income and average profit margin Yingchun Lou (2008) released a similar conclusion Therefore, various conclusions were released by previous studies on non-interest income impacts on CBs’ operating efficiency

Table 2.1: Review of relevant studies

Investigation on factors affecting non-interest income

DeYoung & Rice

(2004)

- Large banks earned higher non-interest income

- Banks with good management capacity would rely less on interest income

non Modern technology increases nonnon interest income, bad debt securitization would reduce non-interest income of CB

- CBs diversified their income when the economy grows slowly and the inflation rate decreases

Authors Main findings

Atellu (2016) &

Njenga (2014)

Bank size and asset management efficiency were positively and significantly related to non-interest income while ATM development, inflation and gross domestic product growth were negatively and significantly related to non-interest income

significantly negative and correlated to the effect on risk level

Smith and Jones

Gomez and Patel

(2019)

Banks investing heavily in technology and automation have the potential to significantly improve non-interest income through reducing operating costs and creating new services

Zhang and Wu

(2020)

Commercial banks that perform well in sustainable finance and CSR activities often have higher non-interest income due to attracting trust and support from the community and customers

Nguyen Minh Sang Non-interest income depended on factors, namely size of total assets,

Authors Main findings

and Nguyen Thi

Doan Viet Hung

(2020)

Factors affecting non-interest income included the ratio of deposits to total assets, the ratio of marginal interest income, ratio of equity to total assets, technology, cost to income, net profit to total assets, inflation, interest rates, Lerner indicators and income diversification

Nguyen The Binh,

Nguyen Duong Gia

Tran (2022)

Factors having positive impact on non-interest income included credit scale, bank size, ROA, Bank’s default risk, and costs In addition, customer deposits, liquidity, marginal interest income and inflation had a negative impact on non-interest income Economic growth had

no impact on non-interest income in the period of 2009 - 2020

Research on the impact of non-interest income on CBs’ OE

DeYoung & Rice

(2004),

Factors: bank characteristics, market conditions and technological development had a strong impact on the increase in non-interest income at US CB, a positive relationship was found between non-interest income and OE of US Banks

Stiroh (2004)

The results unveiled that the decreasing volatility of net operating activities decreases volatility of net interest income making risk-adjusted returns lower and risk higher

Limei Sun, Siqin

Wu, Zili Zhu & Alec

Stephenson (2017)

Non-interest income was negatively correlated with commercial bank operations; The higher the non-interest income was, the lower the commercial bank's OE would be; Two thresholds existed, namely 0.0998 and 0.1662 As non-interest income reached a higher threshold, the negative relationship would gradually decrease and the coefficient may even become positive

Mostak Ahamed The study’s main findings released a close relationship between

non-Authors Main findings

(2017) interest income diversification and profitability of Indian banks

Foreign banks earned higher risk-adjusted returns from increased earnings diversity Banks with lower asset quality can obtain greater income diversification benefits

Nguyen Thi Diem

Hien and Nguyen

Hong Hat (2016)

TNNL, NIM, GRO, IFL, LORA had the same impact on ROA

Besides, LNA, EQTA, CORA, GDP had the opposite impact on ROA In addition, the financial efficiency fluctuation depended on the following factors, namely TNNL, LNA, EQTA impact in the same direction and NIM had an opposite impact

Le Long Hau &

Pham Xuan Quynh

(2017)

Service activities had the greatest impact on OE, business and investment activities such as foreign exchange, gold trading, and investment securities trading have a positive correlation with OE

Nguyen Minh Sang

& Nguyen Thi Thuy

Trang (2018)

Although the study’s main findings unveiled that non-interest income has no impact on risk, a positive impact on CBs’ profitability during research period was established

Huynh Thi Huong

Thao (2021)

Although non-interest income had a positive impact on ROA and ROE, a negative impact on NIM The variables equity and asset size had the same impact on ROE, ROA and NIM The ratio of outstanding loans to total assets and the ratio of outstanding loans to mobilized capital both had the same impact on ROE and NIM Bad debt had a negative impact on NIM The ratio of total costs to total income had a negative impact on ROA, ROE and NIM

Nguyen Quoc Anh

and Tang My,S

(2022)

Asset size, ratio of loan balance/total assets, equity/total assets, and inflation had the same impact on profit/risk-adjusted return On the contrary, the ratios of operating costs/total assets and customer deposits/ total liabilities had a negative impact on risk-adjusted returns In addition, bank asset size was found to be positively correlated with the banks’ business performance

Van Thi Thai Thu ICONON, ICOCOM, ICOTRAD had positive correlation with ROA,

Authors Main findings

(2022) ROE ICOOTH was positively correlated with ROE but not

significant with ROA LOAN variable was not significant for both ROA and ROE COST variable was negatively correlated with both ROA and ROE SIZE variable was positively correlated with ROA and ROE Besides, EQUITY variable was positively correlated with ROA and negatively correlated with ROE DEPOSIT was negatively correlated with both ROA and ROE

Zhao (2023) Non-interest income has a positive impact on bank profitability,

especially for state-controlled banks and joint stock banks compared

to urban and agricultural banks On the basis of the research results, Zhao proposed to strengthen the service business and optimize the income structure

(Source: author's summary)

2.6 Research gap

Most of studies only focused on ICO-non variable to evaluate the impact on OE Most of the studies failed to evaluate in detail non-interest income components, including ICO-com, ICO-trad and ICO-oth, affecting the non-interest income

At the same time, most studies only focused on evaluating CBs’ OE through ROA and ROE variables or using the separate DEA method No studies conducted overall OE evaluation

by using both of the above methods

Most previous studies failed to demonstrate the impact channel of non-interest income on CBs’ OE Therefore, the impact channel of non-interest income and its components of on CBs’

OE were searched by the author hereof through asset utilization efficiency and interest expense ratio and similar costs to total assets, the ratio of service operating costs to total assets

p_value of regression coefficient in the model was often used to release research hypothesis-related inferences Therefore, in this study, the author uses Bayes analysis was applied

as a reliability verification method by the author hereof

SUMMARY OF CHAPTER 2

Chapter 2 presented the literature review related to non-interest income impacts on CBs’

CHAPTER 3: METHODOLOGY TO STUDY THE IMPACT OF NON-INTEREST INCOME ON THE OPERATIONAL EFFICIENCY OF COMMERCIAL BANKS 3.1 Research design

To study the impact of non-interest income on the OE of CB, the Project conducted the following research: (1) Research factors affecting non-interest income; (2) Research the impact

of non-interest income on the OE of CB in Vietnam in the period from 2012 to 2022; (3) Research the impact channel of non-interest income on the OE of CB in Vietnam in the period from 2012-

2022

Quantitative research methods were implemented to quantify research models In this thesis, the author applied panel data regression techniques and Pooled OLS, FEM, REM, FGLS, SGMM, and Bayes analysis methods

3.2 Method to evaluate factors affecting non-interest income of Vietnamese CB

H4: The net interest income ratio has a negative impact on non-interest income

H5: The ratio of customer deposits to total assets has a positive impact on non-interest income

H6: Rate of return (ROA, ROE) has a positive impact on non-interest income H7:

Income diversification has a positive impact on non-interest income

H8: The number of ATMs and POS machines per working-age population has a positive impact on non-interest income

H9: Economic growth has a positive impact on non-interest income H10: Inflation has a positive impact on non-interest income

3.2.2 Research models

ICO NON i,t = α + β 1 EQTA i,t + β 2 BANKSIZE i,t + β 3 LOANTAi,t + β 4 NIM i,t +

β 5 DEPTA i,t + β 6 ROAi,t + β 7 ROEi,t + β 8 HII i,t + β 9 TEC i,t + β 10 GDPi,t + β 11 INF i,t + εi,t

Therein: CONON i,t is the dependent variable reflecting the human resource ratio of bank

i in year t, CONTROLi,t is the variable that controls the set of internal factors of the bank such as: net interest income ratio, outstanding debt ratio loans/total assets, equity/total assets, customer deposits/total assets, Bank size, ROA, ROE, income diversification index and number of ATMs, POS and variables macroeconomic factors such as economic growth and inflation α is the blocking coefficient; β are estimated parameters; ε is the random error

3.3 Method to evaluate the impact of non-interest income on OE of Vietnamese CB 3.3.1 Develop research hypotheses

H1: Non-interest income has a positive impact on business performance

H2: The bank's capital structure has a positive impact on business OE

H3: The size of the bank has a positive impact on business OE

H4: The ratio of outstanding loans to total assets has a positive impact on business OE H5: The bad debt ratio of CB has a negative impact on economic OE

H6: The ratio of customer deposits to total assets has a positive impact on business OE H7: Economic growth has a positive impact on business OE

H8: Inflation has a positive impact on business OE

of bank in the year t

ICO TRAD i,t is the independent variable of non-interest income from investment business activities of bank i in year t

ICOOTH i,t is the independent variable of non-interest income from other activities

of bank i in the year t

CONTROLi,t is a control variable that collects internal factors of the bank such as the bank's capital structure, bank size, ratio of outstanding loans to total assets, bad debt ratio, and operating time of the banks and macroeconomic factors such as economic growth and inflation impact the operating OE of bank i in year t; α is the blocking coefficient; β and γ are estimated parameters; ε is the random error

3.4 The model determines the impact channel of non-interest income on the operational

efficiency of Vietnamese commercial banks

Yi,t = α + β1ICONONi,t + γCONTROL i,t + ε i,t (3) Yi,t = α + β1ICO COM i,t + β2ICO TRADi,t + β3ICO OTH i,t + γCONTROL i,t + ε i,t (4)

In which, Yi,t is the dependent variable with representative variables being asset utilization efficiency (AU), the ratio of interest expenses and similar expenses to total assets (TER), the ratio

of operating expenses service activity to total assets (STA) of bank i in year t

CHAPTER 3 SUMMARY

Based on the research reviewed in chapter 2, chapter 3 conducted research and proposed a research model Besides, chapter 3 also presented how to measure variables and explain the meaning of variables in the research model In particular, the ROA, ROE, TE and SE indexes are quantities representing the operational efficiency of commercial banks ICONON, ICOCOM ,ICOTRAD & ICOOTH are independent variables of non-interest income Chapter 3 also briefly describes the data and how to collect data in the study The last part of chapter 3 is the research model of the topic Based on this as a premise for researching and testing variables in chapter 4

CHAPTER 4 RESEARCH RESULTS AND DISCUSSION 4.1 Research results on factors affecting non-interest income of CB in Vietnam

Table 4.1 Research results on the impact of factors affecting non-interest income

at Vietnamese CB using the SGMM method

Table 4.2 Model estimation results using the Bayes method Mean Std dev MCSE Median [95% cred

Source: calculation results from STATA17.0 software

Table 4.3 Probability of regression coefficients

Source: calculation results from STATA 17.0 software

Research results show that the variables: DEPTA, ROA, HHI, TEC, GDP have a positive impact on non-interest income while the BANKSIZE variable has a negative impact on non-interest income

4.2 Research results on the impact of non-interest income on the OE of CB in Vietnam

Table 4.4 Estimated results according to SGMM for ROA ROA (regression model 2) ROA (regression model 1) Coef Err z P>/z/ Coef Err z P>/z/