State Ownership Makes Stronger the Relationship between Market Power and Income Diversity – A Case of Vietnamese Commercial Banks | Chapter 05 | Emerging Issues and Development in Economics and Trade Vol. 1
The Project on Restructuring the Credit
Institution System in the first period from 2011 to 2015 and the second period
from 2016 to 2020 has emphasized the important role of reducing the relying on
traditional activities and increasing the share of income from non-credit
services. The level of non-interest income, per contra, varies from state-owned
banks to privately-own bank. The paper, therefore, was conducted to examine the
relationship between market power and income diversity under the moderating of
state ownership by using a sample of 26 Vietnamese commercial banks, listed in
Ho Chi Minh Stock Exchange (HOSE), Ha Noi Stock Exchange (HNX), UPCoM and OTC,
during 2007 to 2017. The market power was proxied by both the conventional
Lerner index and the efficiency-adjusted Lerner index; the quotient of net
non-interest income to total operating income represented the income diversity;
and state ownership was treated as a dummy variable and a moderator.
Additionally, bank characteristics and country characteristics were considered
to be control and dummy variables in the research models. Based on panel data
analysis with GMM estimators, the results pointed out that the banks with
greater market power can generate more non-interest income. This relationship,
moreover, was greatly impacted by state ownership. Specifically, this paper
also highlighted that state ownership makes stronger on the association between
bank market power and its income diversity. The findings are expected to add
the gap in the existing literature, lacking of investigating the impacts of
market power on bank income diversity, and the moderating role of state
ownership in this relation in Vietnamese banking sector, which is ignored or
opposite in most recent studies. Thereby, the paper also gives some useful
implications for investors, bank managers as well as policy makers to catch up
the market fluctuations.
Author(s) Details
Tin Ho
School of Business,
International University, Vietnam National University, HCM, Quarter 6, Linh
Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam.
Quy Vo
School of Business,
International University, Vietnam National University, HCM, Quarter 6, Linh
Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam.
View Volume: https://doi.org/10.9734/bpi/eidet/v1
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