The impact of owner's capital on typical profitability at Vietnam commercial banks

Abstract

Realizing that equity is a factor that affects the profitability of enterprises, especially commercial banks. At the same time, the profitability of commercial banks is impacted by a variety of factors. The authors chose to research the subject of "Impact of Equity on Typical Profitability of Vietnamese Commercial Banks". By doing this, the influence of equity is made clear. Also, strategies and advancements are offered to increase the profitability of commercial banks in Vietnam. The topic is based on the theory of equity, the theory of profitability, and the indicators affecting the profitability of commercial banks in Vietnam, thereby assessing the impact of equity on profitability, typical profitability in Vietnamese commercial banks. With data collected from 24 commercial banks in Vietnam in the period 2009-2021, the authors give the following results: equity-to-assets ratio (CAP) has a negative impact on ROE and a negative effect on ROE upward ROA; customer deposits to total assets (DTA), operating expenses to operating income (COST) ratios, and state ownership have negative effects on both ROE and ROA; outstanding loans to customers (LOAN), foreign ownership (FO) and inflation (INF) has a positive effect on both ROE and ROA. In addition, the bank’s size (SIZE) has a positive effect on ROE. Since then, the authors have proposed some practical solutions to improve the profitability of commercial banks in Vietnam in the coming time.