Factors Affecting the Market Power of Commercial Banks in Vietnam

Abstract

This research examines factors which potentially affect the market power of the commercial banks in Vietnam. Our data include the accounting and financial information of Vietnamese banks for the 2005-2014 period. We use the Lerner index to measure bank market power. Employing panel data analysis, we find that the competition of the commercial banks in Vietnam is quite high in comparison with China, which has a similar banking system. We also find that other factors significantly affect the banks’ market power including size, the ratio of loan loss provisions, the ratio of non-interest income, the equity ratio, the number of banks, state ownership, inflation, and GDP growth.

Keywords

Lerner index, commercial banks, market power, Vietnam

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