Impact of Income Diversification on Vietnamese Bank Performance: Evidence from Bayesian Approach

This detailed study focuses on the complex relationship between the performance of 31 Vietnamese commercial banks from 2010 to 2021 and income diversification. To resolve doubts and questions about the benefits of diversifying the banking industry as well as provide useful information for the Vietnamese market, this study integrated the Bayesian method. The results of this study raise the importance of income diversification in improving the health of Vietnamese commercial banks by showing a positive and consistent impact on operating performance dynamic. However, the study also warns that over-diversification can have a negative impact on the net interest margin (NIM). In addition, the study expands its scope by introducing and analyzing a number of other important indicators, such as the capital adequacy ratio (ETA), asset growth ratio (GTA), loan ratio (LTA), and loan growth (LGR). These indicators are determined to have a positive impact on many different aspects of banking operations.