The impact of competitive capacity on the financial stability of Vietnamese commercial banks before the context of participation in the CPTPP
Main Article Content
Abstract
Joining the CPTPP is expected to provide the Vietnamese banking industry with many opportunities to develop into the international market. The concentration level of commercial banks will affect the market power at the same time with the stability of that banking system. The paper focuses on analyzing the impact of competition on the stability of 31 Vietnamese commercial banks in the period of 2010 - 2018. Empirical research using Lerner index to measure competitiveness, index Zscore to estimate bank stability and the impact factors (independent variables) selected based on the CAMELS analysis framework (IMF). Data using calculated and aggregated results from Worldbank, IMF, published financial statements of the State Bank (SBV), annual reports of Vietnamese commercial banks, data summarized from reports at reputable economic forums. As a result, the article proposes some ideas for policy makers and bank administrators to help the banking industry become more and more stable.
Article Details
Keywords
CPTPP, Competitiveness, Commercial banking, Financial stability
References
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Amidu, M., & Wolfe, S. (2013). Does bank competition and diversification lead to greater stability? Evidence from emerging markets. Review of Development Finance, 3(3), 152-166.
Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297.
Ariss, R. T. (2010). On the implications of market power in banking: Evidence from developing countries. Journal of banking & Finance, 34(4), 765-775.
Athanasoglou, P., Delis, M., & Staikouras, C. (2008). Determinants of Bank Profitability in the South Eastern European Region. Journal of Financial Decision Making, 2, 1-17.
Berger, A. N., Demirgüç-Kunt, A., Levine, R., & Haubrich, G. J. (2004). Bank Concentration and Competition: An Evolution in the Making. Journal of Money, Credit and Banking, 36(3), 433-451.
Berger, A., Klapper, L., & Turk-Ariss , R. (2009). Bank competition and financial stability. Journal of Financial Services Research, 35, 98-118.
Besanko, D., & Thakor, A. (2004). Relationship Banking, Deposit Insurance and Bank Portfolio Choice. Journal of Economic Theory, 30(4), 167-182.
Boot, A. W., Greenbaum, S. I., & Thakor, A. V. (1993). Reputation And Discretion In Financial Contracting. The American Economic Review Vol. 83(5), 1165-1183.
Boyd, J. H., & Nicoló, G. D. (2005). The Theory of Bank Risk Taking and Competition Revisited. The Journal of Finance, 60(3), 1329-1343.
Caminal, R., & Matutes, C. (2002). Market power and banking failures. International Journal of Industrial Organization, 20(9), 1341-1361.
Cihák, M., & Schaeck, K. (2014). Competition, Efficiency, and Stability in Banking. Financial Management, 43(1), 215-241.
Claessens, S., Demirgüç-Kunt, A., & Huizinga, H. (2001). How does foreign entry affect domestic banking markets? Journal of Banking and Finance, 25, 891-911.
Delis, M. (2012). Bank competition, financial reform, and institutions: The importance of being developed. Journal of Development Economics, 97, 450-465.
Delis, M., & Tsionas, E. (2009). The joint estimation of bank-level market power and efficiency. Journal of Banking & Finance, 33(10), 1842-1850.
Demirguc-Kunt, Asli; Huizinga, Harry. (2016). Determinants of commercial bank interest margins and profitability : some international evidence (English). The World Bank economic review, 309-408.
Hoàng Công Gia Khánh & Trần Hùng Sơn (2015). Phát triển thị trường tài chính và rủi ro của các ngân hàng thương mại Việt Nam. Tạp chí Phát triển Kinh tế, 26(12), 53-68.
Fernández, R. O., & Garza-García, J. G. (2017). The relationship between bank competition and financial stability: A case study of the Mexican banking industry. Ensayos Revista de Economía 0(1), 103-120.
Fu, X. M., Lin, Y. R., & Molyneux, P. (2014). Bank competition and financial stability in Asia Pacific. Journal of Banking and Finacce, 38, 64-77.
Goetz, M. (2017). Competition and bank stability. Journal of Financial Intermediation, 35, 145 – 168.
Jeon, J. Q., Lee, C., & Moffett, C. M. (2011). Effects of foreign ownership on payout policy: Evidence from the Korean market. Journal of Financial Markets, 14(2), 344-375.
Juabin, M. (2019). Financial Performance Analysis of Distressed Banks in Ghana: Exploration of Financial Ratios and Z-score. MPRA Paper 97095, University Library of Munich, Germany.
Kasman, A., & Carvallo, O. (2014). Financial stability, competition and efficiency in Latin American and Caribbean banking. Journal of Applied Economics, 49(2), 301-324.
Keeley, M. C. (1990). Deposit Insurance, Risk, and Market Power in Banking. The American Economic Review, 80(5), 1183-1200.
Lee, C.-C., Hsieh, M.-F., & Yang, S.-J. (2014). The relationship between revenue diversification and bank performance: Do financial structures and financial reforms matter? Japan and the World Economy, 29, 18-35.
Manlagñit, M. (2011). ost efficiency, determinants, and risk preferences in banking: A case of stochastic frontier analysis in the Philippines. Journal of Asian Economics, 22, 23-35.
Martinez-Miera, D., & Repullo, R. (2010). Does Competition Reduce the Risk of Bank Failure? Review of Financial Studies, 23(10), 3638-3664.
Maudos, J., & Solís, L. (2009). The Determinants of Net Interest Income in the Mexican Banking System: An Integrated Model. Journal of Banking and Finance, 35, 1920-1931.
Mensi, S., & Labidi, W. (2015). The Effect of Diversification of Banking Products on the Relationship between Market Power and Financial Stability. American Journal of Economics and Business Administration, 7(4), 185-193.
Micco, A., Panizza, U., & Yañez, M. (2007). Bank ownership and performance. Does politics matter? Journal of Banking & Finance, 31(1), 219-241.
Michael C. Keeley. (1990). Deposit Insurance, Risk, and Market Power in Banking. The American Economic Review, 80(5), 1183-1200.
Mustafa, A., & Toçi, V. (2017). Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach. Journal of Economics and Business, 35(2), 459-485.
Nguyễn Minh Hà & Nguyễn Bá Hướng (2016). Phân tích các yếu tố ảnh hưởng đến rủi ro phá sản ngân hàng bằng phương pháp Z-Score. Tạp chí Kinh tế & Phát triển, 229, 17-25.
Pathan, S., Skully, M., & Wickramanayake, J. (2007). Board Size, Independence and Performance: An Analysis of Thai Banks. Asia-Pacific Financial Markets, 14(3), 211-227.
Sadikoglu, E., & Zehir, C. (2010). Investigating the effects of innovation and employee performance on the relationship between total quality management practices and firm performance: An empirical study of Turkish firms. International Journal of Production Economics, 127 (1), 13-26.
Sanya, S., & Wolfe, S. (2011). Can Banks in Emerging Economies Benefit from Revenue Diversification? Journal of Financial Services Research, 40, 79-101.
Tan, Y. (2016). Efficiency and Competition in Chinese Banking. Chandos.
Võ Xuân Vinh & Đặng Bửu Kiếm (2016). Năng lực cạnh tranh, lợi nhuận và sự ổn định của các ngân hàng Việt Nam. Tạp chí Phát triển Kinh tế, 27(12), 25-45.
Amidu, M., & Wolfe, S. (2013). Does bank competition and diversification lead to greater stability? Evidence from emerging markets. Review of Development Finance, 3(3), 152-166.
Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297.
Ariss, R. T. (2010). On the implications of market power in banking: Evidence from developing countries. Journal of banking & Finance, 34(4), 765-775.
Athanasoglou, P., Delis, M., & Staikouras, C. (2008). Determinants of Bank Profitability in the South Eastern European Region. Journal of Financial Decision Making, 2, 1-17.
Berger, A. N., Demirgüç-Kunt, A., Levine, R., & Haubrich, G. J. (2004). Bank Concentration and Competition: An Evolution in the Making. Journal of Money, Credit and Banking, 36(3), 433-451.
Berger, A., Klapper, L., & Turk-Ariss , R. (2009). Bank competition and financial stability. Journal of Financial Services Research, 35, 98-118.
Besanko, D., & Thakor, A. (2004). Relationship Banking, Deposit Insurance and Bank Portfolio Choice. Journal of Economic Theory, 30(4), 167-182.
Boot, A. W., Greenbaum, S. I., & Thakor, A. V. (1993). Reputation And Discretion In Financial Contracting. The American Economic Review Vol. 83(5), 1165-1183.
Boyd, J. H., & Nicoló, G. D. (2005). The Theory of Bank Risk Taking and Competition Revisited. The Journal of Finance, 60(3), 1329-1343.
Caminal, R., & Matutes, C. (2002). Market power and banking failures. International Journal of Industrial Organization, 20(9), 1341-1361.
Cihák, M., & Schaeck, K. (2014). Competition, Efficiency, and Stability in Banking. Financial Management, 43(1), 215-241.
Claessens, S., Demirgüç-Kunt, A., & Huizinga, H. (2001). How does foreign entry affect domestic banking markets? Journal of Banking and Finance, 25, 891-911.
Delis, M. (2012). Bank competition, financial reform, and institutions: The importance of being developed. Journal of Development Economics, 97, 450-465.
Delis, M., & Tsionas, E. (2009). The joint estimation of bank-level market power and efficiency. Journal of Banking & Finance, 33(10), 1842-1850.
Demirguc-Kunt, Asli; Huizinga, Harry. (2016). Determinants of commercial bank interest margins and profitability : some international evidence (English). The World Bank economic review, 309-408.
Hoàng Công Gia Khánh & Trần Hùng Sơn (2015). Phát triển thị trường tài chính và rủi ro của các ngân hàng thương mại Việt Nam. Tạp chí Phát triển Kinh tế, 26(12), 53-68.
Fernández, R. O., & Garza-García, J. G. (2017). The relationship between bank competition and financial stability: A case study of the Mexican banking industry. Ensayos Revista de Economía 0(1), 103-120.
Fu, X. M., Lin, Y. R., & Molyneux, P. (2014). Bank competition and financial stability in Asia Pacific. Journal of Banking and Finacce, 38, 64-77.
Goetz, M. (2017). Competition and bank stability. Journal of Financial Intermediation, 35, 145 – 168.
Jeon, J. Q., Lee, C., & Moffett, C. M. (2011). Effects of foreign ownership on payout policy: Evidence from the Korean market. Journal of Financial Markets, 14(2), 344-375.
Juabin, M. (2019). Financial Performance Analysis of Distressed Banks in Ghana: Exploration of Financial Ratios and Z-score. MPRA Paper 97095, University Library of Munich, Germany.
Kasman, A., & Carvallo, O. (2014). Financial stability, competition and efficiency in Latin American and Caribbean banking. Journal of Applied Economics, 49(2), 301-324.
Keeley, M. C. (1990). Deposit Insurance, Risk, and Market Power in Banking. The American Economic Review, 80(5), 1183-1200.
Lee, C.-C., Hsieh, M.-F., & Yang, S.-J. (2014). The relationship between revenue diversification and bank performance: Do financial structures and financial reforms matter? Japan and the World Economy, 29, 18-35.
Manlagñit, M. (2011). ost efficiency, determinants, and risk preferences in banking: A case of stochastic frontier analysis in the Philippines. Journal of Asian Economics, 22, 23-35.
Martinez-Miera, D., & Repullo, R. (2010). Does Competition Reduce the Risk of Bank Failure? Review of Financial Studies, 23(10), 3638-3664.
Maudos, J., & Solís, L. (2009). The Determinants of Net Interest Income in the Mexican Banking System: An Integrated Model. Journal of Banking and Finance, 35, 1920-1931.
Mensi, S., & Labidi, W. (2015). The Effect of Diversification of Banking Products on the Relationship between Market Power and Financial Stability. American Journal of Economics and Business Administration, 7(4), 185-193.
Micco, A., Panizza, U., & Yañez, M. (2007). Bank ownership and performance. Does politics matter? Journal of Banking & Finance, 31(1), 219-241.
Michael C. Keeley. (1990). Deposit Insurance, Risk, and Market Power in Banking. The American Economic Review, 80(5), 1183-1200.
Mustafa, A., & Toçi, V. (2017). Estimation of the banking sector competition in the CEE countries: The Panzar-Rosse approach. Journal of Economics and Business, 35(2), 459-485.
Nguyễn Minh Hà & Nguyễn Bá Hướng (2016). Phân tích các yếu tố ảnh hưởng đến rủi ro phá sản ngân hàng bằng phương pháp Z-Score. Tạp chí Kinh tế & Phát triển, 229, 17-25.
Pathan, S., Skully, M., & Wickramanayake, J. (2007). Board Size, Independence and Performance: An Analysis of Thai Banks. Asia-Pacific Financial Markets, 14(3), 211-227.
Sadikoglu, E., & Zehir, C. (2010). Investigating the effects of innovation and employee performance on the relationship between total quality management practices and firm performance: An empirical study of Turkish firms. International Journal of Production Economics, 127 (1), 13-26.
Sanya, S., & Wolfe, S. (2011). Can Banks in Emerging Economies Benefit from Revenue Diversification? Journal of Financial Services Research, 40, 79-101.
Tan, Y. (2016). Efficiency and Competition in Chinese Banking. Chandos.
Võ Xuân Vinh & Đặng Bửu Kiếm (2016). Năng lực cạnh tranh, lợi nhuận và sự ổn định của các ngân hàng Việt Nam. Tạp chí Phát triển Kinh tế, 27(12), 25-45.