The influence of diversifying income sources on the financial performance: An empirical study on Vietnamese commercial banks
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Abstract
This research investigates the impact of income diversification on the financial outcomes of commercial banks in Vietnam. The analysis utilizes financial reports from 26 Vietnamese commercial banks spanning from 2012 to 2022. A variety of analytical methods, including the Pooled Ordinary Least Squares (OLS) model, Fixed Effects Model (FEM), Random Effects Model (REM), and System Generalized Method of Moments (SGMM) models, were employed to evaluate the data. The findings suggest that diversifying income streams enhances the financial health of commercial banks. The case of Vietnamese banks indicates that bank growth and an increase in borrowing activities positively influence financial results. Additionally, it is recommended for banks to manage deposit ratios of customers and lower the ratio of loan loss provisions to optimize financial performance.
Article Details
Keywords
Financial performance, Generalized Method of Moments, Income diversification
References
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