COMPETITION, RISK AND PROFITABILITY IN BANKING SYSTEM — EVIDENCE FROM VIETNAM

Thi Hien Nguyen and Ha Giang Tran
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Thi Hien Nguyen: Vietnam — Japan Institute for Human Resources Development, Foreign Trade University, Vietnam
Ha Giang Tran: University of Economics Ho Chi Minh City, Vietnam

The Singapore Economic Review (SER), 2020, vol. 65, issue 06, 1491-1505

Abstract: The development in information technology results in a significant increase in bank competition. The question of whether increased competition improves bank profitability and risk reduction is important in many aspects. This paper analyzes the impact of competition on profitability and risk in the context of Vietnam using OLS estimator on data set of 37 Vietnamese commercial banks. The main results present that banks with a higher competition index tend to have higher profitability which is measured by ROE and NIM. In addition, our empirical results also show that banks tend to take on more risk when facing increased competition.

Keywords: Bank competition; profit; risk; Vietnam banking system (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217590820500137

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