What is it about?
This study investigates whether the trade-off between net interest margin and non-interest income exists in the Vietnamese banking
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Why is it important?
Most studies examine the relationship between NII and NIM separately. In particular, the investigation of the determinants of NIMs must explicitly take into account of the potential impact of NII. By contrast, we examine the two-way relationship between NII and NIM using a simultaneous equations model. In addition, The presence of foreign-owned banks in Vietnam resulted in fierce competition for deposits and loans, thereby reducing interest margins for domestic banks. In response, domestic banks have diversified away from their traditional business activities into new fee-based sources of revenue (off-balance sheet activities) (Le 2015; Nguyen & Simioni 2015). As such, Vietnam offers a particularly interesting environment in which to investigate this critical issue.
Perspectives
This study would help the readers have a better understanding the long-standing debate about whether Vietnamese banks should diversify towards non-traditional activities.
Tu Le
University of Canberra
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This page is a summary of: The interrelationship between net interest margin and non-interest income: evidence from Vietnam, International Journal of Managerial Finance, October 2017, Emerald,
DOI: 10.1108/ijmf-06-2017-0110.
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