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30/03/2023
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Le, V., Pham, Q., Bui, T., & Nguyen, P. (2023). Factors affecting the level of customer deposit: the case of commercial banks in Vietnam. Journal of International Economics and Management, 23(1), 52-69. https://doi.org/10.38203/jiem.023.1.0061
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Factors affecting the level of customer deposit: the case of commercial banks in Vietnam
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Abstract
This study aims to evaluate the factors affecting the level of customer deposits in Vietnamese commercial banks. The research sample includes 25 banks from 2009 to 2021. The secondary data were collected from the audited financial statements of banks and the statistical information of the Hanoi and Ho Chi Minh Stock Exchanges. The regression results show that bank profitability, loan quality, listing status, and state-controlled ownership have a positive effect on the level of customer deposits, while bank liquidity, average interest rate, and global financial crisis negatively affect the level of customer deposits. According to these results, commercial banks should focus on developing benefits for depositors and strategies to build customer trust and confidence to increase the level of customer deposits. The findings also imply the positive role of deposit insurance and the State Bank, together with the government, in mobilizing deposits from customers. Our study provides reliable empirical evidence of the impact of state controlled ownership, stock listing, and global financial crisis on the level of customer deposits. Bank managers and other stakeholders attract deposits from customers, and the findings add to the evidence for developing related theories.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Keywords
Commercial bank, Level of customer deposit, Vietnam
References
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Amba, M.S. and Almukharreq, F. (2013), “Impact of the financial crisis on profitability of the Islamic banks vs conventional banks: evidence from GCC”, International Journal of Financial Research, Vol. 4 No. 3, pp. 83 - 93.
Ambe, M.E. (2017), “An investigation of determinants of deposit mobilization in commercial banks of Ethiopia”, Journal of Research on Humanities and Social Sciences, Vol. 7 No. 19, pp. 55 - 64.
Andries, A.M. and Ursu, S.G. (2016), “Financial crisis and bank efficiency: an empirical study of European banks”, Economic Research - Ekonomska Istraživanja, Vol. 29 No. 1, pp. 485 - 497.
Asayesh, H., Mohammadi, M., Zahed, M. and Abolhasani, A. (2017), “Factors affecting the banking system’s deposits”, International Journal of Management, Information Technology and Engineering, Vol. 5 No. 6, pp. 23 - 28.
Ayene, G.Y. (2020), “Determinants of deposit mobilization in the case of commercial bank of Ethiopia selected branches”, European Journal of Business and Management, Vol. 12 No. 13, pp. 39 - 50.
Azolibe, C.B. (2019), “Macroeconomic dynamics, bank-specific factors and deposit mobilization of the Nigerian banking sector”, Asian Journal of Economics, Business and Accounting, Vol. 12 No. 2, pp. 1 - 16.
Baehaqie, S., Fahmi, I. and Beik, I.S. (2017), “Determining factors of deposit level of Islamic bank in Indonesia”, Al-Iqtishad: Jurnal Ilmu Ekonomi Syariah, Vol. 9 No. 2, pp. 213 - 226.
Baltagi, B.H. (2008), Econometric analysis of panel data, John Wiley and Sons Ltd., Chichester.
Baumol, W. (1952), “The transactions demand for cash: an inventory theoretic approach”, The Quarterly Journal of Economics, Vol. 66 No. 4, pp. 545 - 556.
Bessis, J. (2015), Risk management in banking (4th Edition), Wiley (UK).
Boadi, E.K., Li, Y. and Lartey, V.C. (2015), “Determinants of bank deposits in Ghana: does interest rate liberalization matters?”, Modern Economy, Vol. 6 No. 9, pp. 990 - 1000.
Carroll, C.D., Hall, R.E. and Zeldes, S.P. (1992), “The buffer-stock theory of saving: some macroeconomic evidence”, Brookings Papers on Economic Activity, Vol. 1992 No. 2, pp. 61 - 156.
Cubillas, E. and Suarez, N. (2018), “Bank market power and lending during the global financial crisis”, Journal of International Money and Finance, Vol. 89, pp. 1 - 22.
Davydov, D. (2018), “Does state ownership of banks matter? Russian evidence from the financial crisis”, Journal of Emerging Market Finance, Vol. 17 No. 2, pp. 250 - 285.
Dharwadkar, R., George, G. and Brandes, P. (2000), “Privatization in emerging economies - An agency theory perspective”, The Academy of Management Review, Vol. 25 No. 3, pp. 650 - 669.
Djankov, S. and Murrell, P. (2002), “Enterprise restructuring in transition: a quantitative survey”, Journal of Economic Literature, Vol. 40 No. 3, pp. 739 - 792.
Eichengreen, B. and Gupta, P. (2013), “The financial crisis and Indian banks: survival of the fittest?”, Journal of International Money and Finance, Vol. 39, pp. 138 - 152.
Eriemo, N.O. (2014), “Macroeconomic determinants of bank deposits in Nigeria”, Journal of Economic and Sustainable Development, Vol. 5 No. 10, pp. 49 - 58.
Femi, M., Odi, N. and James, S.O. (2021), “Determinable factors affecting commercial banks deposit: the case of Nigeria (2000-2019)”, Journal of Economics, Finance and Management Studies, Vol. 4 No. 4, pp. 213 - 223.
Ferrouhi, E. M. (2017), “Determinants of bank deposits in Morocco”, Munich Personal RePEc Archive, Paper No. 79075.
Fitch, T.P. (2000), Dictionary of banking terms, Barron’s Business Guides, BES Publishing.
Friedman, M. (1957), “The permanent income hypothesis”, A Theory of the Consumption Function, Princeton University Press, pp. 20 - 37.
Fueda, I. and Konishi, M. (2007), “Depositors’ response to deposit insurance reforms: evidence from Japan, 1990–2005”, Journal of Financial Services Research, Vol. 31 No. 2, pp. 101 - 122.
Greene, W.H. (2018), Econometric analysis (8th Edition), Pearson, New York.
Gujarati, D.N. (2008), Basic econometrics (5th Edition), United States: McGraw-Hill Education.
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate data analysis, Pearson Education Inc.
Herald, F. and Heiko, H. (2008), “Lebanon-determinants of commercial banks deposits in a regional financial center”, IMF Working Paper, WP/09/195.
Hosono, K., Iwaki, H. and Tsuru, K. (2005), “Banking crises, deposit insurance, and market discipline: lessons from the Asian crises”, RIETI Discussion Paper Series, 05-E-029, pp. 1 - 26.
Islam, S.N., Ali, M.J. and Wafik, A. (2019), “Determinants of deposit mobilization of private commercial banks: evidence from Bangladesh”, International Journal of Business and Management Invention, Vol. 8 No. 10, pp. 26 - 33.
Islam, S., Sarker, B., Mowla, I., Jahan, I., Roy, D. and Ullah, A. (2017), “Determinants of bank deposit in Bangladesh: an ARDL cointegration approach”, Thoughts on Banking and Finance (A Journal of Bangladesh Bank Training Academy), Vol. 6 No. 1, pp. 79 - 91.
Jifar, S.T.K. (2021), “Macroeconomic determinants of commercial banks deposit growth in Ethiopia: a panel analysis”, Innovations, Vol. 67, pp. 791 - 802.
Keynes, J.M. (1936), The general theory of employment, investment, and money, Harcourt Brace, London (UK).
Larbi-Siaw, O. and Lawer, P.A. (2015), “Determinants of bank deposits in Ghana: a cointegration approach”, Asian Journal of Economics and Empirical Research, Vol. 2 No. 1, pp. 1 - 7.
Legass, H.A., Shikur, A.A. and Ahmed, O.M. (2021), “Determinants of commercial banks deposit growth evidence from Ethiopian commercial banks”, Journal of Finance and Accounting, Vol. 9 No. 6, pp. 207 - 215.
Levin, A., Lin, C.F. and Chu, C.S. . (2002), “Unit root tests in panel data: asymptotic and finite-sample properties”, Journal of Econometrics, Vol. 108 No. 1, pp. 1 - 24.
Modigliani, F. and Brumberg, R. (1954), “Utility analysis and the consumption function: an interpretation of cross-section data”, Franco Modigliani, Vol. 1 No. 1, pp. 388 - 436.
Mustafa, K. and Seyra, Y. (2009), “An analysis of interest rate spread in Bangladesh”, Journal of Bangladesh Development Studies, Vol. 32 No. 4, pp. 1 - 34.
Nada, M. (2010), Can banks provide liquidity in a financial crisis?, Federal Reserve Bank of Kansas City, Economic Revision.
Namazi, M. and Salehi, M. (2010), “The role of inflation in financial repression: evidence of Iran”, World Applied Sciences Journal, Vol. 11 No. 6, pp. 653 - 661.
Nguyen, C.D., Tran, T.N. and Phan, T.L. (2021), “Macro factors affecting deposit growth in commercial banks in Vietnam”, Financial and Monetary Market Review (Vietnamese), Vol. 3&4, pp. 58 - 63.
Park, S. and Peristiani, S. (1998), “Market discipline by thrift depositors”, Journal of Money, Credit and Banking, Vol. 30 No. 3, pp. 347 - 364.
Philip, T. (1968), “Interest rate practices of commercial banks: case for office regulation”, Journal of Economic and Political Weekly, Vol. 3 No. 20, pp. 789 - 792.
Rao, N.D. (1975), “Deposit mobilisation by co-operative banks: a comparison with scheduled commercial banks”, Economic and Political Weekly, Vol. 29, pp. 1098 - 1100.
Samson, O. and Abass, A.S. (2013), “Does depositing money in bank impact economic growth? Evidence from Nigeria”, African Journal of Business Management, Vol. 7 No. 3, pp. 196 - 205.
Tibshirani, R. (1996), “Regression shrinkage and selection via the Lasso”, Journal of the Royal Statistical Society. Series B (Methodological), Vol. 58 No. 1, pp. 267 - 288.
Tun, N.N. (2019), “An empirical analysis of macroeconomic factors affecting on the deposit mobilization of private commercial banks in Myanmar”, International Journal on Recent Trends in Business and Tourism, Vol. 3 No. 2, pp. 38 - 47.
Unvan, Y.A. and Yakubu, I.N. (2020), “Do bank-specific factors drive bank deposits in Ghana?”, Journal of Computational and Applied Mathematics, Vol. 376, 112827.
Varman, M. (2005), “Impact of self-help groups on formal banking habits”, Economic and Political Weekly, Vol. 40 No. 17, pp. 1705 - 1713.
Vo, X.V. and Nguyen, H.H. (2018), “Bank restructuring and bank efficiency - The case of Vietnam”, Cogent Economics & Finance, Vol. 6 No. 1, 1520423.
Vu, T.P.T. and Le, T.T. (2021), “An empirical analysis of macroeconomic and bank-specific factors affecting bank deposits in Vietnam”, International Journal of Financial Research, Vol. 12 No. 2, pp. 172 - 183.
Yakubu, I.N. and Abokor, A.H. (2020), “Factors determining bank deposit growth in Turkey: an empirical analysis”, Rajagiri Management Journal, Vol. 14 No. 2, pp. 121 - 132.
Akhtar, B., Akhter, W. and Shahbaz, M. (2017), “Determinants of deposits in conventional and Islamic banking: a case of an emerging economy”, International Journal of Emerging Markets, Vol. 12 No. 2, pp. 296 - 309.
Amba, M.S. and Almukharreq, F. (2013), “Impact of the financial crisis on profitability of the Islamic banks vs conventional banks: evidence from GCC”, International Journal of Financial Research, Vol. 4 No. 3, pp. 83 - 93.
Ambe, M.E. (2017), “An investigation of determinants of deposit mobilization in commercial banks of Ethiopia”, Journal of Research on Humanities and Social Sciences, Vol. 7 No. 19, pp. 55 - 64.
Andries, A.M. and Ursu, S.G. (2016), “Financial crisis and bank efficiency: an empirical study of European banks”, Economic Research - Ekonomska Istraživanja, Vol. 29 No. 1, pp. 485 - 497.
Asayesh, H., Mohammadi, M., Zahed, M. and Abolhasani, A. (2017), “Factors affecting the banking system’s deposits”, International Journal of Management, Information Technology and Engineering, Vol. 5 No. 6, pp. 23 - 28.
Ayene, G.Y. (2020), “Determinants of deposit mobilization in the case of commercial bank of Ethiopia selected branches”, European Journal of Business and Management, Vol. 12 No. 13, pp. 39 - 50.
Azolibe, C.B. (2019), “Macroeconomic dynamics, bank-specific factors and deposit mobilization of the Nigerian banking sector”, Asian Journal of Economics, Business and Accounting, Vol. 12 No. 2, pp. 1 - 16.
Baehaqie, S., Fahmi, I. and Beik, I.S. (2017), “Determining factors of deposit level of Islamic bank in Indonesia”, Al-Iqtishad: Jurnal Ilmu Ekonomi Syariah, Vol. 9 No. 2, pp. 213 - 226.
Baltagi, B.H. (2008), Econometric analysis of panel data, John Wiley and Sons Ltd., Chichester.
Baumol, W. (1952), “The transactions demand for cash: an inventory theoretic approach”, The Quarterly Journal of Economics, Vol. 66 No. 4, pp. 545 - 556.
Bessis, J. (2015), Risk management in banking (4th Edition), Wiley (UK).
Boadi, E.K., Li, Y. and Lartey, V.C. (2015), “Determinants of bank deposits in Ghana: does interest rate liberalization matters?”, Modern Economy, Vol. 6 No. 9, pp. 990 - 1000.
Carroll, C.D., Hall, R.E. and Zeldes, S.P. (1992), “The buffer-stock theory of saving: some macroeconomic evidence”, Brookings Papers on Economic Activity, Vol. 1992 No. 2, pp. 61 - 156.
Cubillas, E. and Suarez, N. (2018), “Bank market power and lending during the global financial crisis”, Journal of International Money and Finance, Vol. 89, pp. 1 - 22.
Davydov, D. (2018), “Does state ownership of banks matter? Russian evidence from the financial crisis”, Journal of Emerging Market Finance, Vol. 17 No. 2, pp. 250 - 285.
Dharwadkar, R., George, G. and Brandes, P. (2000), “Privatization in emerging economies - An agency theory perspective”, The Academy of Management Review, Vol. 25 No. 3, pp. 650 - 669.
Djankov, S. and Murrell, P. (2002), “Enterprise restructuring in transition: a quantitative survey”, Journal of Economic Literature, Vol. 40 No. 3, pp. 739 - 792.
Eichengreen, B. and Gupta, P. (2013), “The financial crisis and Indian banks: survival of the fittest?”, Journal of International Money and Finance, Vol. 39, pp. 138 - 152.
Eriemo, N.O. (2014), “Macroeconomic determinants of bank deposits in Nigeria”, Journal of Economic and Sustainable Development, Vol. 5 No. 10, pp. 49 - 58.
Femi, M., Odi, N. and James, S.O. (2021), “Determinable factors affecting commercial banks deposit: the case of Nigeria (2000-2019)”, Journal of Economics, Finance and Management Studies, Vol. 4 No. 4, pp. 213 - 223.
Ferrouhi, E. M. (2017), “Determinants of bank deposits in Morocco”, Munich Personal RePEc Archive, Paper No. 79075.
Fitch, T.P. (2000), Dictionary of banking terms, Barron’s Business Guides, BES Publishing.
Friedman, M. (1957), “The permanent income hypothesis”, A Theory of the Consumption Function, Princeton University Press, pp. 20 - 37.
Fueda, I. and Konishi, M. (2007), “Depositors’ response to deposit insurance reforms: evidence from Japan, 1990–2005”, Journal of Financial Services Research, Vol. 31 No. 2, pp. 101 - 122.
Greene, W.H. (2018), Econometric analysis (8th Edition), Pearson, New York.
Gujarati, D.N. (2008), Basic econometrics (5th Edition), United States: McGraw-Hill Education.
Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. and Tatham, R.L. (2006), Multivariate data analysis, Pearson Education Inc.
Herald, F. and Heiko, H. (2008), “Lebanon-determinants of commercial banks deposits in a regional financial center”, IMF Working Paper, WP/09/195.
Hosono, K., Iwaki, H. and Tsuru, K. (2005), “Banking crises, deposit insurance, and market discipline: lessons from the Asian crises”, RIETI Discussion Paper Series, 05-E-029, pp. 1 - 26.
Islam, S.N., Ali, M.J. and Wafik, A. (2019), “Determinants of deposit mobilization of private commercial banks: evidence from Bangladesh”, International Journal of Business and Management Invention, Vol. 8 No. 10, pp. 26 - 33.
Islam, S., Sarker, B., Mowla, I., Jahan, I., Roy, D. and Ullah, A. (2017), “Determinants of bank deposit in Bangladesh: an ARDL cointegration approach”, Thoughts on Banking and Finance (A Journal of Bangladesh Bank Training Academy), Vol. 6 No. 1, pp. 79 - 91.
Jifar, S.T.K. (2021), “Macroeconomic determinants of commercial banks deposit growth in Ethiopia: a panel analysis”, Innovations, Vol. 67, pp. 791 - 802.
Keynes, J.M. (1936), The general theory of employment, investment, and money, Harcourt Brace, London (UK).
Larbi-Siaw, O. and Lawer, P.A. (2015), “Determinants of bank deposits in Ghana: a cointegration approach”, Asian Journal of Economics and Empirical Research, Vol. 2 No. 1, pp. 1 - 7.
Legass, H.A., Shikur, A.A. and Ahmed, O.M. (2021), “Determinants of commercial banks deposit growth evidence from Ethiopian commercial banks”, Journal of Finance and Accounting, Vol. 9 No. 6, pp. 207 - 215.
Levin, A., Lin, C.F. and Chu, C.S. . (2002), “Unit root tests in panel data: asymptotic and finite-sample properties”, Journal of Econometrics, Vol. 108 No. 1, pp. 1 - 24.
Modigliani, F. and Brumberg, R. (1954), “Utility analysis and the consumption function: an interpretation of cross-section data”, Franco Modigliani, Vol. 1 No. 1, pp. 388 - 436.
Mustafa, K. and Seyra, Y. (2009), “An analysis of interest rate spread in Bangladesh”, Journal of Bangladesh Development Studies, Vol. 32 No. 4, pp. 1 - 34.
Nada, M. (2010), Can banks provide liquidity in a financial crisis?, Federal Reserve Bank of Kansas City, Economic Revision.
Namazi, M. and Salehi, M. (2010), “The role of inflation in financial repression: evidence of Iran”, World Applied Sciences Journal, Vol. 11 No. 6, pp. 653 - 661.
Nguyen, C.D., Tran, T.N. and Phan, T.L. (2021), “Macro factors affecting deposit growth in commercial banks in Vietnam”, Financial and Monetary Market Review (Vietnamese), Vol. 3&4, pp. 58 - 63.
Park, S. and Peristiani, S. (1998), “Market discipline by thrift depositors”, Journal of Money, Credit and Banking, Vol. 30 No. 3, pp. 347 - 364.
Philip, T. (1968), “Interest rate practices of commercial banks: case for office regulation”, Journal of Economic and Political Weekly, Vol. 3 No. 20, pp. 789 - 792.
Rao, N.D. (1975), “Deposit mobilisation by co-operative banks: a comparison with scheduled commercial banks”, Economic and Political Weekly, Vol. 29, pp. 1098 - 1100.
Samson, O. and Abass, A.S. (2013), “Does depositing money in bank impact economic growth? Evidence from Nigeria”, African Journal of Business Management, Vol. 7 No. 3, pp. 196 - 205.
Tibshirani, R. (1996), “Regression shrinkage and selection via the Lasso”, Journal of the Royal Statistical Society. Series B (Methodological), Vol. 58 No. 1, pp. 267 - 288.
Tun, N.N. (2019), “An empirical analysis of macroeconomic factors affecting on the deposit mobilization of private commercial banks in Myanmar”, International Journal on Recent Trends in Business and Tourism, Vol. 3 No. 2, pp. 38 - 47.
Unvan, Y.A. and Yakubu, I.N. (2020), “Do bank-specific factors drive bank deposits in Ghana?”, Journal of Computational and Applied Mathematics, Vol. 376, 112827.
Varman, M. (2005), “Impact of self-help groups on formal banking habits”, Economic and Political Weekly, Vol. 40 No. 17, pp. 1705 - 1713.
Vo, X.V. and Nguyen, H.H. (2018), “Bank restructuring and bank efficiency - The case of Vietnam”, Cogent Economics & Finance, Vol. 6 No. 1, 1520423.
Vu, T.P.T. and Le, T.T. (2021), “An empirical analysis of macroeconomic and bank-specific factors affecting bank deposits in Vietnam”, International Journal of Financial Research, Vol. 12 No. 2, pp. 172 - 183.
Yakubu, I.N. and Abokor, A.H. (2020), “Factors determining bank deposit growth in Turkey: an empirical analysis”, Rajagiri Management Journal, Vol. 14 No. 2, pp. 121 - 132.