Political Connections and Bank Profitability: Evidence from Vietnamese Commercial Banks

Paper Details

Authors: Duong N.G.; Thu N.H.

DOI: 10.28924/2291-8639-24-2026-34

Journal: International Journal of Analysis and Applications

Year: 2026

Publisher: Etamaths Publishing

Document Type: Article

Open Access: All Open Access; Gold Open Access

Cited by: 0

Abstract

This study examines the impact of political connections, measured through state ownership and CEO political affiliation, on the profitability of Vietnamese Joint-Stock Commercial Banks from 2013 to 2023. The study employs OLS, FEM, REM, FGLS, and GMM models to address potential issues of endogeneity and heteroskedasticity. The results reveal that both SO and PC exert negative and statistically significant effects on bank profitability. In contrast, bank size and GDP growth have a positive influence on profitability, whereas non-performing loans and high liquidity ratios have a negative impact. This study presents novel empirical evidence of the effects of political connections on bank performance in Vietnam. It also offers policy insights suggesting that the State should reduce its ownership role, strengthen regulatory capacity, accelerate privatization, and promote independent and professional bank governance. © 2026 the author(s).

Keywords

and phrases. CEO political connection; bank profitability; political connection; state ownership; Vietnam

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