The impact of financial structure on the profitability of Vietnamese joint-stock commercial banks

This study investigates the impact of financial structure on the profitability of Vietnamese joint-stock commercial banks from 2013 to 2022, encompassing a decade of tubulous economic events such as government-led restructuring, the post-global financial crisis era, and the COVID-19 pandemic. Utilizing various regression models (Fixed Effects Model, Random Effects Model, and Dynamic Fixed Effects Model) and panel data from 20 listed joint-stock commercial banks, the research identifies key factors influencing profitability as measured by Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). The findings reveal that financial structure variables, including equity-to-total assets (EOA) and equity-to-outstanding loans (EOL), exhibit significant relationships with profitability. For example, higher EOA was positively associated with ROA. Additionally, control variables such as the cost-to-income ratio (COI), inflation (INF), and gross domestic product (GDP) also impact profitability. The study provides comprehensive insights and practical recommendations for enhancing the financial stability and sustainable growth of Vietnamese joint-stock commercial banks. Key recommendations include increasing equity capital, expanding customer deposits, and optimizing the lending scale. These findings inform decision-making and management practices in the Vietnamese banking sector.