Bank size and financial intermediation operations in Vietnam: A focus on the deposit-loan nexus in the banking sector
0
Online Published:
25/06/2026
Section:
Finance, Banking, Accounting, and Auditing
Main Article Content
Abstract
Mobilizing customer deposits and lending to customers are the basic financial intermediation activities of commercial banks, and differences in bank size in an emerging country can change the linkages between these activities. Accordingly, this paper explores the moderating role of bank size on the impact of customer deposit growth on loan growth through the analysis of secondary data collected from 25 Vietnamese commercial banks during the period 2010-2024. The estimation results show that customer deposit growth has a positive impact on loan growth, but this impact is reversed when bank size is involved. Bank size plays a positive moderating role in the case of negative impact of deposit growth on loan growth. These findings are empirical evidence confirming the importance of bank size when planning policies or strategies for deposit mobilization linked to lending according to the financial intermediary function of commercial banks.
Keywords
deposits; loans; commercial banks; bank size
Article Details
Field of Economic (JEL Codes)
G20 - General - Financial Institutions and Services
References
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Matthews, K., Thompson, J., & Zhang, T. (2023). The Economics of Banking. World Scientific Publishing Co.
Meral, G. (2015). The effect of bank size and bank capital on the bank lending channel for Turkish banks. American Scientific Research Journal for Engineering, Technology, and Sciences, 12, 1-28.
Naseri, M., Bacha, O. I., & Masih, M. (2020). Too small to succeed versus too big to fail: how much does size matter in banking?. Emerging Markets Finance and Trade, 56(1), 164-187. https://doi.org/10.1080/1540496X.2019.1612359
Nguyen, T. L. H., & Huynh, H. T. (2019). The relationship between size, financial leverage and risk tolerance of Vietnamese commercial banks. Journal of Development and Integration, 46(56), 30-38.
Nguyen, Y., & Nguyen, L. (2022). Funding liquidity, bank capital, and lending growth in a developing country. Cogent Economics & Finance, 10(1), 2122958. https://doi.org/10.1080/23322039.2022.2122958
Okwaro, A., Chelogoi, S., & Kapkiyai, C. (2024). Does Size Matter? Portfolio Diversification and Financial Performance of Commercial Banks in Kenya: Testing the Moderating Effect of Bank Size. Journal of Business, Economics and Management Research Studies, 2(2), 45-63. https://doi.org/10.69897/jobemrs.v2i2.119
Suriawinata, I. S., Prastuti, D., & Hermastuti, P. (2023). Banks' Core Deposits and Net Interest Margin: Do Size and Ownership Structure Matter?. Jurnal Keuangan dan Perbankan, 27(3), 360-372. http://dx.doi.org/10.26905/jkdp.v27i3.9642
Suroso, S., & Mala, C. M. F. (2024). The strength of competition and market efficiency in Determining bank profits. Risk Governance and Control: Financial Markets & Institutions, 14(3), 8–17. https://doi.org/10.22495/rgcv14i3p1
Thakor, A. V., & Boot, A. (2008). Handbook of Financial Intermediation and Banking. Elsevier Science.
Tutino, F., Colasimone, C., Brugnoni, G. C., & Riccetti, L. (2014). Intermediation Model, Bank Size and Lending to Customers: Is There a Significant Relationship? Evidence from Italy: 2008–2011. In Governance, Regulation and Bank Stability. Palgrave Macmillan. 201-241. https://doi.org/10.1057/9781137413543_10
Wang, T. (2015). Competition and increasing returns to scale: A model of bank size. The Economic Journal, 125(585), 989-1014. https://doi.org/10.1111/ecoj.12104
Yasnur, M., & Kurniasih, A. (2017). Factors affecting bank lending growth: Cases in Indonesia. International Journal of Scientific and Research Publications, 7(11), 69-76.
Allen, F., & Santomero, A. M. (1997). The theory of financial intermediation. Journal of banking & finance, 21(11-12), 1461-1485. https://doi.org/10.1016/S0378-4266(97)00032-0
Awdeh, A. (2017). The determinants of credit growth in Lebanon. International Business Research, 10(2), 9-19. https://doi.org/10.5539/IBR.V10N2P9
Aziz, A., & Maulida, S. (2024). Bank Credit Growth in Indonesia During the Covid-19 Pandemic and Its Regulations. Journal of Central Banking Law and Institutions, 3(1), 177-202. https://doi.org/10.21098/jcli.v3i1.47
Banya, R., & Biekpe, N. (2018). Banking efficiency and its determinants in selected frontier african markets. Economic Change and Restructuring, 51(1), 69-95. https://doi.org/10.1007/s10644-016-9200-3
Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173
Cao, J. (2021). The Economics of Banking. Routledge.
Chun, S. H., & Ardaaragchaa, N. (2024). Analysis of Factors Affecting the Loan Growth of Banks with a Focus on Non-Performing Loans. Journal of Risk and Financial Management, 17(5), 203 (1-9). https://doi.org/10.3390/jrfm17050203
Dahir, A., Mahat, F., Razak, N. H., & Bany-Ariffin, A. N. (2019). Capital, funding liquidity, and bank lending in emerging economies: An application of the LSDVC approach. Borsa Istanbul Review, 19(2), 139-148. https://doi.org/10.1016/j.bir.2018.08.002
Dang, V. D., Le, T. T. H., Le, D. H., & Nguyen, H. D. H. (2021). Bank capital and lending behavior of Vietnamese commercial banks. The Journal of Asian Finance, Economics and Business, 8(2), 373-385. https://doi.org/10.13106/jafeb.2021.vol8.no2.0373
De Haan, J., & Poghosyan, T. (2012). Size and earnings volatility of US bank holding companies. Journal of Banking & Finance, 36(11), 3008-3016. https://doi.org/10.1016/j.jbankfin.2012.07.008
Demirguc-Kunt, A., Laeven, L., and Levine, R. 2004. Regulations, Market Structure,
Institutions, and the Cost of Financial Intermediation. Journal of Money, Credit, and Banking
36, 593-622. https://doi.org/10.1353/mcb.2004.0045
Diamond, D. W. (1984). Financial intermediation and delegated monitoring. The Review of Economic Studies, 51(3), 393-414. https://doi.org/10.2307/2297430
Diep, T. H., & Tu, P. T. (2022). The role of size in the relationship between competition and risk of Vietnamese commercial banks. Yersin Journal of Science - Economic Management Issue, 12, 20-36.
Fadhlurrahman, A., & Sumarti, N. (2016, April). Implementation of the dynamical system of the deposit and loan growth based on the Lotka-Volterra model and the improved model. In AIP Conference Proceedings, 1723 (1). AIP Publishing. https://doi.org/10.1063/1.4945065
Freixas, X., & Rochet, J. C. (2008). Microeconomics of Banking, The MIT Press.
Greene, W. H. (2018). Econometric Analysis. Pearson.
Gujarati, D. N. (2021). Essentials of econometrics. Sage Publications.
Gupta, S., & Devi, L. (2021). Empirical Analysis of Capital, Funding Liquidity and Bank Lending in Emerging Market Economies: An Application of System GMM Approach. Administrative Development: A Journal of HIPA, Shimla, VIII (SI-1), 247-270. https://doi.org/10.53338/ADHIPA2021.V08.Si01.15
Ivanović, M. (2016). Determinants of credit growth: The case of Montenegro. Journal of Central Banking Theory and Practice, 5(2), 101-118. https://doi.org/10.1515/jcbtp-2016-0013
Jessica, T., and Chalid, D. A. (2019). Determinants of Bank Loan in Indonesia. Advances in Social Science, Education and Humanities Research, 558, 505-512. https://doi.org/10.2991/assehr.k.210531.064
Kayani, I., & Hakiman, H. (2023). Determinants of Bank Performance through Camel Ratio, Digitalization, and Bank Size. Devotion: Journal of Research and Community Service, 4(10), 1938-1948. https://doi.org/10.59188/devotion.v4i10.573
Leland, H. E., & Pyle, D. H. (1977). Informational asymmetries, financial structure, and financial intermediation. The journal of Finance, 32(2), 371-387. https://doi.org/10.2307/2326770
Mahmood, Z. M., Al-Aboudi, A. A. K., & Hamzah, M. H. (2023). Determinants of loan growth and its impact on banking stability: An applied study in a sample of commercial banks listed in the Iraq Stock Exchange for the period (2005-2020). Warith Scientific Journal, 5(14), 38-52.
Matthews, K., Thompson, J., & Zhang, T. (2023). The Economics of Banking. World Scientific Publishing Co.
Meral, G. (2015). The effect of bank size and bank capital on the bank lending channel for Turkish banks. American Scientific Research Journal for Engineering, Technology, and Sciences, 12, 1-28.
Naseri, M., Bacha, O. I., & Masih, M. (2020). Too small to succeed versus too big to fail: how much does size matter in banking?. Emerging Markets Finance and Trade, 56(1), 164-187. https://doi.org/10.1080/1540496X.2019.1612359
Nguyen, T. L. H., & Huynh, H. T. (2019). The relationship between size, financial leverage and risk tolerance of Vietnamese commercial banks. Journal of Development and Integration, 46(56), 30-38.
Nguyen, Y., & Nguyen, L. (2022). Funding liquidity, bank capital, and lending growth in a developing country. Cogent Economics & Finance, 10(1), 2122958. https://doi.org/10.1080/23322039.2022.2122958
Okwaro, A., Chelogoi, S., & Kapkiyai, C. (2024). Does Size Matter? Portfolio Diversification and Financial Performance of Commercial Banks in Kenya: Testing the Moderating Effect of Bank Size. Journal of Business, Economics and Management Research Studies, 2(2), 45-63. https://doi.org/10.69897/jobemrs.v2i2.119
Suriawinata, I. S., Prastuti, D., & Hermastuti, P. (2023). Banks' Core Deposits and Net Interest Margin: Do Size and Ownership Structure Matter?. Jurnal Keuangan dan Perbankan, 27(3), 360-372. http://dx.doi.org/10.26905/jkdp.v27i3.9642
Suroso, S., & Mala, C. M. F. (2024). The strength of competition and market efficiency in Determining bank profits. Risk Governance and Control: Financial Markets & Institutions, 14(3), 8–17. https://doi.org/10.22495/rgcv14i3p1
Thakor, A. V., & Boot, A. (2008). Handbook of Financial Intermediation and Banking. Elsevier Science.
Tutino, F., Colasimone, C., Brugnoni, G. C., & Riccetti, L. (2014). Intermediation Model, Bank Size and Lending to Customers: Is There a Significant Relationship? Evidence from Italy: 2008–2011. In Governance, Regulation and Bank Stability. Palgrave Macmillan. 201-241. https://doi.org/10.1057/9781137413543_10
Wang, T. (2015). Competition and increasing returns to scale: A model of bank size. The Economic Journal, 125(585), 989-1014. https://doi.org/10.1111/ecoj.12104
Yasnur, M., & Kurniasih, A. (2017). Factors affecting bank lending growth: Cases in Indonesia. International Journal of Scientific and Research Publications, 7(11), 69-76.
How to Cite
Le, T. T. H. (2026). Bank size and financial intermediation operations in Vietnam: A focus on the deposit-loan nexus in the banking sector. Journal of Finance - Marketing Research, 4(4ene). https://doi.org/10.52932/jfmr.v4i4ene.1199