The Impact of Ownership Concentration on Bank Profitability: A Case Study of Vietnam

Pham Thi Kieu Khanh; Pham  Thi Bich Duyen; Le Thanh Tam

Authors

Pham Thi Kieu Khanh Quy Nhon University and National Economics University, Vietnam
Pham Thi Bich Duyen Quy Nhon University, Vietnam
Le Thanh Tam National Economics University, Vietnam

Keywords:

Bank Profitability, Commercial Bank of Vietnam, Listing, M&A, Ownership Concentration

Abstract

This article examines the impact of ownership concentration on bank profitability, with the sample of 28 Vietnamese commercial banks in the period 2009–2022. Bank profitability is assessed using both return on assets (ROA) and return on equity (ROE). The main regression methods include the least squares method (OLS), fixed effects model (FEM), random effects model (REM), and generalized least squares method (GLS). To perform robustness checks, the study examines endogeneity and uses the system generalized method of moments (S-GMM) for estimation. The interaction variables are added in regression models to reflect the role of intermediary factors such as mergers and acquisitions (M&A) activities and listing status on the relationship between ownership concentration and bank profitability. Key findings are: (i) the hypothesis of the negative impact of ownership concentration, represented by the largest shareholder, on bank profitability. (ii) the adverse effects of ownership concentration on profitability are mitigated in banks engaged in M&A activities and those listed on the stock market. The implications of this study extend beyond Vietnam and may hold relevance to countries sharing similar ownership structures and legal frameworks.

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