Workforce size and bank performance: evidence from a threshold model in Vietnam

Bank size is commonly measured by total assets, yet organizational theories identify workforce size as an important source of scale-related inefficiency. This study identifies a structural breakpoint in the workforce-performance relationship among 27 Vietnamese commercial banks over the period 2008–2024 using Hansen’s panel threshold regression. Below the estimated threshold (approximately 1,400–2,400 employees depending on the profitability measure), each 1% increase in workforce size is associated with approximately a 0.60–0.71% increase in profitability. Above the threshold, the marginal contribution declines to 0.50–0.59%, consistent with diminishing returns to workforce expansion. Fintech development is positively associated with return on assets but negatively associated with net interest margin, suggesting a shift toward more efficiency-oriented profitability. These findings provide evidence consistent with Williamson’s hierarchical control loss theory in the banking context and carry practical implications for workforce planning and digital transformation strategy in emerging market banks.