Impact of Fintech’s Development on Bank Performance: An Empirical Study from Vietnam
Abstract
In recent years, fintech has exploded in popularity and importance in the finan- cial industry. Its impacts have spread widely throughout the world, including Vietnam. This study aims to investigate the effect of fintech’s development on bank performance in Vietnam. Based on the unstructured data about fintech on the financial expert web- sites from Vietnam, the word frequency statistic technique of the text mining approach is applied for measuring fintech’s development under the support of Python-based solu- tions. The bank-level data of 15 Vietnamese banks for the period from the first quarter of 2019 to the second quarter of 2021 are collected from the quarterly financial statements in the Vietstock organization. Python programming and text mining techniques are used to compile this dataset by gathering information from popular and relevant websites. The generalized least squares method is used for estimating the panel models. The estimation result shows the significant impact of fintech’s development on bank profitability, but the net interest margin does not associate with the fintech variable. Besides, some interesting findings are revealed: The slow banking transformation to adapt to the rise of fintech and the COVID-19 pandemic increased bank profitability. Furthermore, suggestions for the banks and fintech companies are recommended, and the limitations and directions for further research are also proposed.
Keywords
DOI: 10.22146/gamaijb.71040
References
Academy of Finance. (2021). Fintech là gì? Đặc điểm, tác động của công nghệ tài chính tới thị trường. https://hocvientaichinh.com.vn/fintech-la-gi-dac-diem-tac-dong-cua-cong-nghe-tai-chinh-toi-thi-truong.html
Ali, M., & Puah, C. H. (2019). The internal determinants of bank profitability and stability. Management Research Review, 42(1), 49–67. https://doi.org/10.1108/MRR-04-2017-0103
Al‐Matari, E. M. (2021). The determinants of bank profitability of <scp>GCC</scp> : The role of bank liquidity as moderating variable—Further analysis. International Journal of Finance & Economics, 26(1), 1–13. https://doi.org/10.1002/ijfe.2485
Alt, R., Beck, R., & Smits, M. T. (2018). FinTech and the transformation of the financial industry. Electronic Markets, 28(3), 235–243. https://doi.org/10.1007/s12525-018-0310-9
Amador, J. S., Gómez-González, J. E., & Pabón, A. M. (2013). Loan growth and bank risk: new evidence. Financial Markets and Portfolio Management, 27(4), 365–379. https://doi.org/10.1007/s11408-013-0217-6
Arner, A., Arner, D. W., Barberis, J., & Buckley, R. P. (2015). The Evolution of FinTech: A New Post-Crisis Paradigm? UNSW Law Research Paper No. 2016-62, Hong Kong, 1–45. http://hdl.handle.net/10722/221450
Asmarani, S. C., & Wijaya, C. (2020). Effects of fintech on stock return: Evidence from retail banks listed in Indonesia stock exchange. The Journal of Asian Finance, Economics and Business, 7(7), 95–104. https://doi.org/10.13106/jafeb.2020.vol7.no7.095
Audrino, F., Sigrist, F., & Ballinari, D. (2020). The impact of sentiment and attention measures on stock market volatility. International Journal of Forecasting, 36(2), 334–357. https://doi.org/10.1016/j.ijforecast.2019.05.010
Batten, J. A., & Vo, X. V. (2016). Bank risk shifting and diversification in an emerging market. Risk Management, 18(4), 217–235. https://doi.org/10.1057/s41283-016-0008-2
Batten, J., & Vo, X. V. (2019). Determinants of Bank Profitability—Evidence from Vietnam. Emerging Markets Finance and Trade, 55(6), 1417–1428. https://doi.org/10.1080/1540496X.2018.1524326
Beccalli, E. (2007). Does IT investment improve bank performance? Evidence from Europe. Journal of Banking & Finance, 31(7), 2205–2230. https://doi.org/10.1016/j.jbankfin.2006.10.022
Berger, A. N. (1995). The Relationship between Capital and Earnings in Banking. Journal of Money, Credit and Banking, 27(2), 432–456. https://doi.org/10.2307/2077877
Berger, A. N., & Demirgüç-Kunt, A. (2021). Banking Research in the Time of COVID-19. Journal of Financial Stability, 1–97. https://doi.org/10.1016/j.jfs.2021.100939
Bonin, J. P., Hasan, I., & Wachtel, P. (2005). Bank performance, efficiency and ownership in transition countries. Journal of Banking & Finance, 29(1), 31–53. https://doi.org/10.1016/j.jbankfin.2004.06.015
Chaudhari, S., Aparna, R., Tekkur, V. G., Pavan, G. L., & Karki, S. R. (2020). Ingredient/Recipe Algorithm using Web Mining and Web Scraping for Smart Chef. 2020 IEEE International Conference on Electronics, Computing and Communication Technologies (CONECCT), 3, 1–4. https://doi.org/10.1109/CONECCT50063.2020.9198450
Cheng, M., & Qu, Y. (2020). Does bank FinTech reduce credit risk? Evidence from China. Pacific-Basin Finance Journal, 63, 1–24. https://doi.org/10.1016/j.pacfin.2020.101398
Chen, P.-F., & Liu, P.-C. (2013). Bank ownership, performance, and the politics: Evidence from Taiwan. Economic Modelling, 31(1), 578–585. https://doi.org/10.1016/j.econmod.2012.12.006
Chowdhury, M. A. F., & Rasid, M. E. S. M. (2015). The determinants of the profitability of Islamic banks: a cross-sectional study from Asia and Africa. International Journal of Business and Globalisation, 15(3), 375–388. https://doi.org/10.1504/IJBG.2015.071913
Dang, V. D. (2019). The effects of loan growth on bank performance: Evidence from Vietnam. Management Science Letters, 9(6), 899–910. https://doi.org/10.5267/j.msl.2019.2.012
Demirguc-Kunt, A., Klapper, L., Singer, D., Ansar, S., & Hess, J. (2018). The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. In The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. https://doi.org/10.1596/978-1-4648-1259-0
Demirgüç-Kunt, A., Pedraza, A., & Ruiz-Ortega, C. (2021). Banking sector performance during the COVID-19 crisis. Journal of Banking & Finance, xxxx, 106305. https://doi.org/10.1016/j.jbankfin.2021.106305
Dranev, Y., Frolova, K., & Ochirova, E. (2019). The impact of fintech M&A on stock returns. Research in International Business and Finance, 48, 353–364. https://doi.org/10.1016/j.ribaf.2019.01.012
Fernández Del Carpio, A., & Angarita, L. B. (2018). Techniques Based on Data Science for Software Processes: A Systematic Literature Review. In Communications in Computer and Information Science (Vol. 918, pp. 16–30). https://doi.org/10.1007/978-3-030-00623-5_2
FitchRatings. (2021). Vietnam Banks: Peer Review 2021.
Gómez, R. S., Sánchez, A. R., García, C. G., & Pérez, J. G. (2020). The VIF and MSE in raise regression. Mathematics, 8(4), 1–28. https://doi.org/10.3390/math8040605
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics. Douglas Reiner, McGraw-Hill/Irwin.
Gupta, A., Dengre, V., Kheruwala, H. A., & Shah, M. (2020). Comprehensive review of text-mining applications in finance. Financial Innovation, 6(39), 1–25. https://doi.org/10.1186/s40854-020-00205-1
Gupta, V., & Lehal, G. S. (2009). A Survey of Text Mining Techniques and Applications. Journal of Emerging Technologies in Web Intelligence, 1(1), 60–76. http://www.jetwi.us/index.php?m=content&c=index&a=show&catid=165&id=969
Hansen, L. P. (1982). Large sample properties of Generalized method of moments estimators. Econometrica, 50(4), 1029–1054.
Lee, I., & Shin, Y. J. (2018). Fintech: Ecosystem, business models, investment decisions, and challenges. Business Horizons, 61(1), 35–46. https://doi.org/10.1016/j.bushor.2017.09.003
Leung, H., & Ton, T. (2015). The impact of internet stock message boards on cross-sectional returns of small-capitalization stocks. Journal of Banking & Finance, 55, 37–55. https://doi.org/10.1016/j.jbankfin.2015.01.009
Li, Y., Spigt, R., & Swinkels, L. (2017). The impact of FinTech start-ups on incumbent retail banks’ share prices. Financial Innovation, 3, 1–16. https://doi.org/10.1186/s40854-017-0076-7
Loughran, T., & McDonald, B. (2016). Textual Analysis in Accounting and Finance: A Survey. Journal of Accounting Research, 54(4), 1187–1230. https://doi.org/10.1111/1475-679X.12123
Malik, A., Thanh, N. M., & Shah, H. (2016). Effects of ownership structure on bank performance: evidence from Vietnamese banking sector. International Journal of Business Performance Management, 17(2), 184–197. https://doi.org/10.1504/IJBPM.2016.075545
Malik, S. K., & Rizvi, S. (2011). Information Extraction Using Web Usage Mining, Web Scrapping and Semantic Annotation. 2011 International Conference on Computational Intelligence and Communication Networks, 465–469. https://doi.org/10.1109/CICN.2011.97
Menicucci, E., & Paolucci, G. (2016). The determinants of bank profitability: empirical evidence from European banking sector. Journal of Financial Reporting and Accounting, 14(1), 86–115. https://doi.org/10.1108/JFRA-05-2015-0060
Milian, E. Z., Spinola, M. de M., & Carvalho, M. M. de. (2019). Fintechs: A literature review and research agenda. Electronic Commerce Research and Applications, 34, 1–21. https://doi.org/10.1016/j.elerap.2019.100833
Morgan, P. J., & Trinh, L. Q. (2020). FinTech and Financial Literacy in Vietnam. In ADBI Working Paper Series. https://www.adb.org/sites/default/files/publication/616781/adbi-wp1154.pdf
Nair, V. (2014). Getting Started with Beautiful Soup. Packt Publishing Ltd. http://books.google.com/books?hl=en&lr=&id=qBqxAgAAQBAJ&oi=fnd&pg=PT5&dq=Getting+Started+with+Beautiful+Soup&ots=4LsySRSAcI&sig=s58QIY8SJi8JUMdPONR0pkcBq7g
Navaretti, G. B., Calzolari, G., Mansilla-Fernandez, J. M., & Pozzolo, A. F. (2018). Fintech and Banking. Friends or Foes? SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3099337
Osborne, M., Fuertes, A., & Milne, A. (2012). Capital and Profitability in Banking: Evidence From US Banks. In 3rd Emerging Scholars in Banking and Finance Conference, Cass Business School.
Ozili, P. K. (2018). Impact of digital finance on financial inclusion and stability. Borsa Istanbul Review, 18(4), 329–340. https://doi.org/10.1016/j.bir.2017.12.003
Pejić Bach, M., Krstić, Ž., Seljan, S., & Turulja, L. (2019). Text Mining for Big Data Analysis in Financial Sector: A Literature Review. Sustainability, 11(5), 1–27. https://doi.org/10.3390/su11051277
Pham, T. P., Popesko, B., Quddus, A., Hussain, S., & Tran, T. B. (2021). Do Fintech-Related keywords influence bank return? A case study from Vietcombank and Sacombank in Vietnam. SCMS Journal of Indian Management, 18(4), 5–14. https://www.scms.edu.in/past_issues/article?journal_id=81
Pham, T. P., Popesko, B., Quddus, A., & Nguyen, T. K. N. (2021). Innovation and Bank Efficiency in Vietnam and Pakistan. Scientific Papers of the University of Pardubice, Series D: Faculty of Economics and Administration, 29(2), 1–11. https://doi.org/10.46585/sp29021184
Pham, T. P., Quddus, A., Asad, A. I., Popesko, B., & Hussain, S. (2021). The factors of fintech: A literature review. DOKBAT 2021 - 17th International Bata Conference for Ph.D. Students and Young Researchers, 395–405. https://doi.org/10.7441/dokbat.2021.34
Phan, D. H. B., Narayan, P. K., Rahman, R. E., & Hutabarat, A. R. (2020). Do financial technology firms influence bank performance? Pacific-Basin Finance Journal, 62, 1–13. https://doi.org/10.1016/j.pacfin.2019.101210
Richardson, L. (2019). Beautiful Soup Documentation. https://www.crummy.com/software/BeautifulSoup/bs4/doc/%0Ahttps://media.readthedocs.org/pdf/beautifulsoup-korean/latest/beautifulsoup-korean.pdf%0Ahttp://www.crummy.com/software/BeautifulSoup/bs4/doc/
Sheng, T. (2021). The effect of fintech on banks’ credit provision to SMEs: Evidence from China. Finance Research Letters, 39, 101558. https://doi.org/10.1016/j.frl.2020.101558
Statista. (2021). Fintech in Vietnam. https://www.statista.com/study/88832/fintech-in-vietnam/
Thakor, A. V. (2020). Fintech and banking: What do we know? Journal of Financial Intermediation, 41, 100833. https://doi.org/10.1016/j.jfi.2019.100833
Vives, X. (2017). The impact of fintech on the banking industry. European Economy, 2, 97–105. https://blog.iese.edu/xvives/files/2018/02/EE_2.2017.pdf#page=99
Vives, X. (2019). Digital disruption in banking. Annual Review of Financial Economics, 11(1), 243–272. https://doi.org/10.1146/annurev-financial-100719-120854
Vo, X. V. (2016). Finance in Vietnam - an overview. Afro-Asian J. of Finance and Accounting, 6(3), 202–209. https://doi.org/10.1504/AAJFA.2016.079311
Wang, R., Liu, J., & Luo, H. (2021). Fintech development and bank risk taking in China. The European Journal of Finance, 27(4–5), 397–418. https://doi.org/10.1080/1351847X.2020.1805782
Wooldridge, J. M. (2001). Applications of generalized method of moments estimation. Journal of Economic Perspectives, 15(4), 87–100. https://doi.org/10.1257/jep.15.4.87
Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data. In The MIT Press. The MIT Press.
Refbacks
- There are currently no refbacks.
Copyright (c) 2024 Gadjah Mada International Journal of Business
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Email the author 
