Digitalization and its impact on commercial banks’ profitability in Vietnam

Huong Mai Nguyen (), Huyen Thi Ngoc Pham, Khue Minh Tran, Mai Thi Tuyet Nguyen and Yen Thi Hai Nguyen
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Huong Mai Nguyen: National Economics University, Hanoi, Vietnam
Huyen Thi Ngoc Pham: National Economics University, Hanoi, Vietnam
Khue Minh Tran: National Economics University, Hanoi, Vietnam
Mai Thi Tuyet Nguyen: National Economics University, Hanoi, Vietnam
Yen Thi Hai Nguyen: National Economics University, Hanoi, Vietnam

HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, 2025, vol. 15, issue 1, 152-164

Abstract: Amid the rapid development of the digital economy in Vietnam, traditional industries, including commercial banking, must recognize digitalization as both a prevailing trend and an essential requirement for sustainable development. This study utilizes the Feasible Generalized Least Squares (FGLS) regression method to examine the impact of digitalization on the profitability of Vietnamese commercial banks from 2013 to 2022. Profitability is measured by Return on Assets (ROA), while the digitalization level is represented by the ICT Index (Information and Communication Technology Development and Application Readiness Index). The model also incorporates two control variables: Credit Risk and Solvency. The findings demonstrate that digitalization has improved profitability in commercial banks. Additionally, credit risk is found to have a negative impact on the profitability (ROA) of commercial banks, while the solvency ratio shows the opposite. Based on these results, the authors propose recommendations to enhance the digitization process and consequently elevate operational efficiency and profitability in Vietnamese commercial banks.

Keywords: commercial banks; digitalization; ICT index; profitability; Vietnam (search for similar items in EconPapers)
JEL-codes: G14 G21 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bjw:econen:v:15:y:2025:i:1:p:152-164

DOI: 10.46223/HCMCOUJS.econ.en.15.1.3281.2025

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