Market structure and bank performance: A comprehensive picture of Vietnam

  • Received March 3, 2023;
    Accepted August 5, 2023;
    Published August 11, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.18(3).2023.07
  • Article Info
    Volume 18 2023, Issue #3, pp. 74-86
  • TO CITE АНОТАЦІЯ
  • Cited by
    2 articles
  • 381 Views
  • 203 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

In the context of the fact that the structure of the Vietnamese banking market has undergone many fluctuations, which has had an impact on banking activities, and the fact that many related studies have been carried out, but the answer is still limited and inconsistent, it is necessary to study the impact of the market structure on banking operations in Vietnam. The paper comprehensively examines the impact of market structure on various aspects of bank performance in Vietnam. The study uses three measures of the structure of the banking industry, namely, the total market share of the largest banks, the squared market share of all banks according to the Herfindahl-Hirshchman index, and the Lerner index on market power (inverse bank competition), to ensure the results are not dependent on any specific measure. The paper applies the two-step system generalized method of moments estimator to conduct regression analysis for a sample of 30 banks from 2007 to 2021. All obtained estimates generally show positive effects on bank performance due to greater market power and higher banking concentration. Concretely, more market power and greater concentration improve bank asset quality, management efficiency, bank profitability, and lending capacity. Overall, the findings of this paper all support the bright side of less competition and more concentration, which is essential to derive policy implications related to supervising competitive environments and stimulating consolidated financial systems.

Acknowledgment
This study is part of Thi Mai Phuong Duong’s PhD dissertation at the Ho Chi Minh University of Banking under the supervision of Van Dan Dang.

view full abstract hide full abstract
    • Table 1. Summary statistics of all variables
    • Table 2. Market structure and non-performing loans
    • Table 3. Market structure and loan loss provisions
    • Table 4. Market structure and bank efficiency by non-interest expenses
    • Table 5. Market structure and bank efficiency by operating expenses
    • Table 6. Market structure and bank profitability by ROA
    • Table 7. Market structure and bank profitability by ROE
    • Table 8. Market structure and bank loan growth
    • Conceptualization
      Thi Mai Phuong Duong
    • Data curation
      Thi Mai Phuong Duong, Van Dan Dang
    • Formal Analysis
      Thi Mai Phuong Duong
    • Investigation
      Thi Mai Phuong Duong
    • Methodology
      Thi Mai Phuong Duong, Van Dan Dang
    • Project administration
      Thi Mai Phuong Duong, Van Dan Dang
    • Validation
      Thi Mai Phuong Duong, Van Dan Dang
    • Visualization
      Thi Mai Phuong Duong
    • Writing – original draft
      Thi Mai Phuong Duong
    • Writing – review & editing
      Thi Mai Phuong Duong, Van Dan Dang
    • Supervision
      Van Dan Dang