tailieunhanh - Benefit from Income Diversification Viet Nam Commercial Banks

In this study, relationship between non-interest income generating activities (income diversification) and bank performance is investigated by using an unbalanced panel dataset of ten commercial banks listed on Vietnam stock market during the period 2007–2016. | VNU Journal of Science: Policy and Management Studies, Vol. 33, No. 2 (2017) 157-165 Benefit from Income Diversification of Viet Nam Commercial Banks Nguyen Van Dinh1, Phi Hong Hanh2,* 1 VNU International School, Building G7-G8, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam 2 University of Financial Business Administration, Van Lam, Hung Yen, Vietnam Received 07 April 2017 Revised 12 May 2017; Accepted 28 June 2017 Abstract: In this study, relationship between non-interest income generating activities (income diversification) and bank performance is investigated by using an unbalanced panel dataset of ten commercial banks listed on Vietnam stock market during the period 2007–2016. Our empirical results indicate that income diversification decrease insolvency risk and enhance performance of listed banks and the relationship between income diversification and bank performance is nonlinear. In addition to be affected by factors of income diversification, bank performance is also affected by banks’ characteristics and business environment factors. Bank size, deposit on total liabilities ratio, the first lags risk adjusted returns have positive effects on bank performance while the effect of enforcement index on bank performance is negative. Keywords: Income diversification, bank performance, banks. 1. Introduction that there is a relationship between diversification and bank performance. In Vietnam, practice has shown that many commercial banks have implemented income diversification strategies for nearly a decade [3]. The income structure of banks has gradually changed. In addition to the interest income from traditional lending activities, noninterest income from services, forex trading activities, securities trading and other activities, also accounts for increasing proportion of the bank's income structure. However, diversification is really beneficial for commercial banks in Vietnam or not, the answer is still not satisfactory and there are many .