Covid-19 Pandemic Impact On Commercial Bank’S Financial Performance In Vietnam

Abstract

The Covid-19 has a major impact on the global economy, and the banking sector has taken the major loss for this epidemic. Vietnam is one of few countries that has reported GDP positive among the pandemic situation; however, in this study, covid pandemic still has the potential threat to Vietnam in general. In this study, we study the impact of Covid-19 on the commercial bank's performance and notice that crisis has not negatively impacted commercial bank's performance. However, due to the pandemic's complexity, evaluate action needs to be taken to figure out the solution for any unexpected crisis in the future. This paper uses panel data from the SNL Financial | S&P Global Market Intelligence, including 23 commercial banks with 174 bank observations in the period 2011-2020. Panel regression with cluster-robust standard error is employed to investigate the impact of the Covid 19 on the bank's performance. The results reveal that Corona crisis has a positive impact on the financial performance of Vietnam commercial banks. In this study, Covid 19 pandemic imposes a consistently positive and significant impact on small-size banks' profitability. However, crisis has almost no visible effect on the financial performance of large-size banks. This study also proves that diversifying the income in bank activities throughout the Covid-19 is one solution to deal with the problem. However, to avoid the potential impact of this crisis and others in the future, the need for policy change from the government, the effect of diversified activities, and the attempt to cut costs such as salary and unnecessary activities during the crisis time