Commercial banks’ capital structure and performance in Vietnam: Panel data model approach

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The study delves into the factors that influence the capital structure of commercial banks in Vietnam. Capital structure, measured by the net debt-to-asset ratio, is a key indicator of bank leverage. The study uses pooled OLS, fixed effects, and random effects models to analyze the impact of factors such as net interest-earning rate, Corporate Income Tax rate, and liquidity on commercial banks’ profitability and their capital structure. Data from 26 banks during the 2010–2022 period in Vietnam was collected for the analysis. The results indicate that factors such as Tax, ROA, growth, and liquidity have significant impacts on the capital structure of the banks. Specifically, Tax has a beta coefficient of –0.05967, ROA has a beta of –0.01796, growth has a beta of 0.000509, and liquidity has a beta of –0.00045. The study found that ROA, Tax, and liquidity are negatively related to the capital structure of Vietnamese commercial banks, meaning that an increase in these factors leads to a decrease in the banks’ total debt-to-total assets and vice versa. The empirical results suggest that commercial banks can manage their capital structure through these factors to reduce their debt-to-asset ratio, resulting in reduced credit risk, improved asset quality, and increased business efficiency. However, lowering the debt-to-asset ratio may also lead to reduced profits from lending activities, particularly when interest rates are high.

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    • Table 1. Descriptive statistics
    • Table 2. Correlation variables analysis
    • Table 3. Pooled OLS model’s regression results
    • Table 4. Regression results according to the FEM model
    • Table 5. Regression results by the REM model
    • Table 6. Regression results of models, including Pooled OLS, FEM, and REM
    • Table 7. Test results
    • Conceptualization
      Doan Van Dinh, Vu Thi Thu Huyen
    • Data curation
      Doan Van Dinh
    • Formal Analysis
      Doan Van Dinh, Vu Thi Thu Huyen
    • Funding acquisition
      Doan Van Dinh, Vu Thi Thu Huyen
    • Writing – original draft
      Doan Van Dinh
    • Writing – review & editing
      Doan Van Dinh
    • Project administration
      Vu Thi Thu Huyen
    • Resources
      Vu Thi Thu Huyen