THE RELATIONSHIP BETWEEN FINANCIAL STRUCTURE AND PROFITABILITY OF VIETNAMESE JOINT-STOCK COMMERCIAL BANKS
DOI:
https://doi.org/10.59266/houjs.2026.1448Keywords:
financial structure, profitability, joint-stock commercial banks, return on assets (ROA), return on equity (ROE), net interest margin (NIM)Abstract
This study examines the relationship between financial structure and profitability of Vietnamese joint-stock commercial banks during the period 2015-2024. Using panel data from 20 listed banks, the study applies the Fixed Effects Model (FEM), Random Effects Model (REM), and Dynamic Fixed Effects Model (DFEM) to evaluate the effects of financial structure on profitability, measured by Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The empirical results indicate that financial structure significantly influences bank profitability. In particular, the equity-to-total assets ratio (EOA) has a positive effect on ROA, highlighting the importance of equity capital in improving financial performance. Among the control variables, the cost-to-income ratio (COI) and inflation (INF) also significantly affect profitability. Based on these findings, the study provides managerial and policy implications to enhance the financial stability and sustainable development of Vietnamese joint-stock commercial banks by strengthening equity capital, expanding customer deposits, and optimizing lending activities.
References
Al-Kayed, L. T., Syed, M. Z., Sharifah, R., & Duasa, J. (2014). The relationship between capital structure and performance of Islamic banks. Journal of Islamic Accounting and Business Research, 5(2), 158-181.
Allen, N. B., & Emilia, B. P. (2002). Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry. Finance and Economics Discussion Series, 2002(54), 1-37. https://doi.org/10.17016/FEDS.2002.54
Bach, P. M. (2006). Financial structure and the profitability of Croatian banks. In Proceedings of the 7th WSEAS International Conference on Mathematics & Computers in Business & Economics. Cavtat, Croatia.
Basel Committee on Banking Supervision. (2023). Basel III monitoring report.
Berger, A. N., & Bonaccorsi di Patti, E. (2006). Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry. Journal of Banking & Finance, 30(4), 1065-1102. https:// doi.org/10.1016/j.jbankfin.2005.05.003
Berger,A. N., Klapper, L. F., Martinez Peria, M. S., & Zaidi, R. (2008). Bank ownership type and banking relationships. Journal of Financial Intermediation, 17, 37-62.
Berger, A. N., & Mester, L. J. (1997). Inside the black box: What explains differences in the efficiencies of financial institutions? Journal of Banking & Finance, 21(7), 895-947.
Birru, M. W. (2016). The impact of capital structure on financial performance of commercial banks in Ethiopia. Global Journal of Management and Business Research, 16(8). http://www.journalofbusiness.org/index.php/ GJMBR/article/view/2121
Demirgüç-Kunt, A., & Huizinga, H. (1999). Determinants of commercial bank interest margins and profitability: Some international evidence. World Bank Economic Review, 13(2), 379-408.
Dietrich, A., & Wanzenried, G. (2014). The determinants of commercial banking profitability in low-, middle-, and high-income countries. The Quarterly Review of Economics and Finance, 54(3), 337-354.
Hughes, J. P., Jagtiani, J., Mester, L. J., & Moon, C. G. (2019). Does scale matter in community bank performance? Evidence obtained by applying several new measures of performance. Journal of Banking & Finance, 106, 471-499.
Hutchison, D. E., & Cox, R. A. K. (2006). The causal relationship between bank capital and profitability. Annals of Financial Economics, 1(1), 1-20.
Lam, C. D., & Vo, H. D. T. (2023). The impact of ownership structure on the profitability and risk of Vietnamese commercial banks. Banking Review. https://tapchinganhang.gov.vn/The-impact-of-ownership-structure-on- profitability-and-risk-of-Vietnamese- commercial-banks-12273.html
Le, T. D. (2018). Bank risk, capitalisation and technical efficiency in the Vietnamese banking system. Australasian Accounting, Business and Finance Journal, 12(3), 41-61. https://doi.org/10.14453/aabfj.v12i3.4
Louzis, D. P., Vouldis, A. T., & Metaxas, V. L. (2012). Macroeconomic and bank- specific determinants of non-performing loans in Greece: A comparative study of mortgage, business and consumer loan portfolios. Journal of Banking & Finance, 36(4), 1012-1027.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. American Economic Review, 48(3), 261-297.
Moussa, M. B. (2018). Determinants of bank capital: Case of Tunisia. Journal of Applied Finance & Banking, 8(2), 1-15.
Musah, A. (2018). The impact of capital structure on profitability of commercial banks in Ghana. Asian Journal of Economic Modelling, 6(1), 21-36.
Nguyen, T. T., Nguyen, T. D., Dinh, T. T., & Vu, K. L. (2021). The impact of capital structure on bank performance: GMM estimation for the case of Vietnam. Press Academia Procedia, 13(1), 73-83. https://doi.org/10.17261/Pressacademia.2021.1426
Osborne, M., Fuertes, A., & Milne, A. (2011). Capital and profitability in banking: Evidence from US banks. UK Financial Services Authority.
Timilsina, G. R. (2020). Infrastructure, economic growth, and poverty: A review (World Bank Policy Research Working Paper). World Bank.
Trujillo-Ponce, A. (2013). What determines the profitability of banks? Evidence from Spain. Accounting & Finance, 53(2), 561-586.
Vuong, T. H. G., Nguyen, H. M., & Nguyen, T. M. N. (2022). The impact of capital structure on the performance of Vietnamese commercial banks. Asian Banking and Economics Journal, 203(2), 54-68. https://scholar.dlu.edu.vn/thuvienso/bitstream/DLU123456789/195891/1/ CVv497S202-2032023054.pdf
