THE IMPACT OF DIGITAL TRANSFORMATION ON THE PERFORMANCE OF COMMERCIAL BANKS IN VIETNAM
DOI:
https://doi.org/10.62985/j.huit_ojs.vol26.no3E.662Keywords:
Digital transformation, bank performance, ROA, ROE, commercial banks.Abstract
This research examines how digital transformation influences the performance of commercial banks in Vietnam. The analysis is based on panel data obtained from the financial reports of 25 banks over the period from 2018 to 2023. To investigate the relationships among variables, the study applies several econometric approaches, including pooled Ordinary Least Squares (OLS), the Fixed Effects Model (FEM), and the Random Effects Model (REM). The selection of the appropriate estimation technique is determined through statistical procedures such as the F-test, Breusch–Pagan Lagrange Multiplier test, and Hausman test, with results indicating that the pooled OLS model provides the best fit for the dataset. The empirical findings demonstrate that digital transformation exerts a positive and statistically significant influence on bank performance, measured through Return on Assets (ROA) and Return on Equity (ROE). Furthermore, internal factors such as bank size, liquidity level, and growth prospects contribute positively to performance outcomes, whereas financial leverage is found to have a detrimental effect. The results confirm all proposed hypotheses. This study enriches the existing literature by offering empirical evidence on the importance of digital transformation as a strategic asset in improving banking performance, particularly within the context of an emerging economy. From a practical standpoint, the findings highlight the need for banks to intensify digitalization efforts, allocate technological resources more efficiently, and maintain an appropriate financial structure in order to strengthen operational effectiveness and sustain competitiveness in an increasingly digital environment.
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