Determinants of the performance of Vietnamese commercial banks: Evidence from 2016 to 2023

This study investigates the factors influencing the performance of 21 Vietnamese commercial banks from 2016 to 2023, employing multiple econometric models including Ordinary Least Squares (OLS), Fixed Effects Model (FEM), Random Effects Model (REM), and Generalized Least Squares (GLS). Bank performance is measured using Return on Assets (ROA) and Return on Equity (ROE). The results reveal that pre-tax profit and the non-performing loan ratio positively affect ROA, while bank size, GDP growth, financial leverage, bank age, and inflation exert negative effects. In terms of ROE, bank size, bank age, and the credit outstanding ratio are found to have a positive impact, whereas the non-performing loan ratio, GDP growth, financial leverage, capital mobilization to total assets ratio, and inflation rate show negative correlations. These findings offer insights into how both internal and macroeconomic factors influence bank profitability in Vietnam.