Bank size and financial intermediation operations in Vietnam: A focus on the deposit-loan nexus in the banking sector
Main Article Content
Abstract
Purpose – This study examines the impact of bank size on financial intermediation, with a specific focus on the deposit-loan growth nexus within the Vietnamese banking sector. Furthermore, it evaluates the moderating role of bank size in shaping these operational dynamics.
Design/methodology/approach – Utilizing panel data from 25 Vietnamese commercial banks over the 2010-2024 period, the research employs Generalized Least Squares (GLS) and Panel-Corrected Standard Errors (PCSE) to ensure robust estimation.
Findings – The empirical findings reveal that while customer deposit growth independently exerts a significant positive impact on loan growth - aligning with classical financial intermediation theory - this relationship is fundamentally altered by the inclusion of bank size. Specifically, bank size acts as a crucial positive moderator, mitigating the negative pressures that may arise between deposit mobilization and credit expansion.
Originality/value – These results suggest that the efficiency of financial intermediation varies significantly across different bank size cohorts. Consequently, the study recommends that bank executives align deposit policies with institutional scale and suggests that the State Bank of Vietnam implement differentiated regulatory frameworks tailored to specific bank size categories to optimize credit growth and operational stability.
Keywords
Bank size; Customer Deposits; Customer Loans; Financial Intermediation Operations
Article Details
Field of Economic (JEL Codes)
G20 - General - G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages - G29 - Other - Financial Institutions and Services
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