Bank profitability and economic growth: evidence on Vietnamese commercial banks (2010-2021)

Abstract

The GDP of the Vietnamese economy has consistently increased, and its integration into international markets has grown in recent years, making for impressive growth. As a result, Vietnamese commercial banks' operating efficiency increased dramatically and showed very positive signs when compared to other developing nations. Naturally, this rapid growth raises the question of how the prosperity of the economy has affected the performance of Vietnamese commercial banks. This study analyzes the relationship between Vietnam's growth in the economy and bank profitability, concentrating on commercial banks from 2010 to 2021. It focuses on how economic independent variables like GDP growth, inflation, employment rate, interest rates, etc. affect bank profitability measurements like return on assets (ROA), using pertinent data and econometric approaches. Additionally, the study investigates internal bank factors that could affect profitability, such as bank size, capital, and credit risk. Following data analysis, the research developed two hypotheses based on findings on a wide range of factors that affect bank profitability. Policymakers, investors, and bank managers who want to comprehend the dynamics of financial performance in a developing country can learn a lot from this analysis.