Thesis Public Defense | VNP28 - Nguyễn Chí Nhân

Regulations and bank performance: basel II in Vietnam

Student: Nguyễn Chí Nhân, VNP-28

Supervisor: Dr. Hồ Hoàng Anh

Abstract:

This study investigates the impact of Basel II implementation on the performance of Vietnamese commercial banks from 2010 to 2024. Using a panel dataset constructed from financial statements, the research applies Random Effects Models (REM) to examine the effects of Basel II adoption on three key indicators: return on assets (ROA), return on equity (ROE), and net interest margin (NIM). Bank-specific variables-total assets, equity capital, non-performing loans, loan loss provisions, customer loans, and short-term loans are included, along with macroeconomic controls such as GDP growth and inflation.

The empirical results indicate that Basel II adoption positively affects ROA and ROE, suggesting that strengthened capital adequacy and risk-based supervision enhance profitability and asset utilization. The effect on NIM is less consistent, reflecting a longer adjustment period for core lending profitability under stricter regulatory requirements. Non-performing loans and provisioning expenses exhibit significant negative impacts on bank performance, highlighting the critical role of asset quality. Additionally, inflation shows a positive relationship with profitability, likely due to faster lending rate adjustments compared to funding costs.

Overall, the findings emphasize that Basel II enhances long-term efficiency and financial stability but imposes short-term compliance challenges. The study provides practical insights for policymakers and bank managers to improve resilience and align with international banking standards.

Keywords: Basel II; Bank performance; Vietnamese commercial banks; ROA; ROE; NIM