Political Connections and Bank Profitability: Evidence from Vietnamese Commercial Banks

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DOI: https://doi.org/10.28924/2291-8639-24-2026-34
Published: Feb 19, 2026
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Nguyen Gia Duong, Nguyen Hong Thu, Political Connections and Bank Profitability: Evidence from Vietnamese Commercial Banks, Int. J. Anal. Appl., 24 (2026), 34.

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Nguyen Gia Duong, Nguyen Hong Thu

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.

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