Digital Transformation and Bank Performance in Vietnam: The Moderating Roles of State Ownership and Bank Size

This study examines the association between digital transformation and bank performance, with particular attention to the moderating roles of state ownership and bank size. The study uses a balanced panel of 28 Vietnamese commercial banks for 2012–2024 and employs Feasible Generalized Least Squares (FGLS) as the baseline estimation method. The results indicate that digital transformation is positively associated with return on assets (ROA) and negatively associated with the cost-to-income ratio (CIR) in the baseline FGLS models. However, the positive association with ROA weakens after controlling for bank and year fixed effects, whereas the negative association with CIR remains comparatively stable across alternative specifications. Evidence for the net interest margin (NIM) remains generally weak and inconclusive. The moderating roles of state ownership and bank size receive only partial support and are sensitive to the performance measure, model specification, and statistical inference method. Overall, the most robust evidence indicates that digital transformation is associated with greater cost efficiency, while heterogeneity related to ownership and bank size should be interpreted cautiously.