GRADUATION THESIS TOPIC: CONTRIBUTION OF HUMAN RESOURCES TO THE PERFORMANCE OF COMMERCIAL BANKS IN THE FOURTH INDUSTRIAL REVOLUTION: EMPIRICAL RESEARCH IN VIETNAM Instructor: Dr. Pham Thu Thuy Student: Thai Vu Hoang Long Student ID: 23A4010382 Class: K23CLC-NHA Hanoi, 8th May, 2024 TABLE OF CONTENTS Commitment. ii List of abbreviations .iii List of Tables and Graphs. v List of Tables.
v List of Graphs. The importance of the topic. Research objectives and questions. Objectives of the study.
Object and scope of the study. Outline of the thesis. 7 CHAPTER 1: THEORETICAL BASIS. Commercial bank and indicators to measure commercial banks’ performance.
Commercial banks and main business activities of commercial banks. Performance measurement indicators of commercial banks. Return on Asset - ROA. Return on Equity - ROE.
Net Interest Margin - NIM. Factors affecting the performance of commercial banks .2 Contribution of human resources to the performance of commercial banks. Classification of human resources in banking. Role of human resources in banking.
Banking human resources in the fourth industrial revolution. 16 CHAPTER 2: CURRENT SITUATION OF HUMAN RESOURCES AND THE PERFORMANCE OF VIETNAM COMMERCIAL BANKS IN THE PERIOD OF 2013 - 2022. Economic context and business activities of Vietnamese commercial banks in the period 2013 - 2022. Economic context in the period 2013-2022 .Business performance of commercial banks in the period 2013 - 2022.
Deposits mobilization activities. Human resources of commercial banks in Vietnam in the period 2013 - 2022. 25 CHAPTER 3: METHODOLOGY AND RESULT DISCUSSION. Conceptual model and hypothesis.
Correlations between variables. Regression analysis with OLS, FEM, REM models. Verify and fix model defects. Results of banking industry to banks’ performance.
Results of human resources variables to banks’ performance. Results of macro variables to banks’ performance. 46 CHAPTER 4: CONCLUSION AND RECOMMENDATIONS. Recommendation to improve the performance of commercial banks in Vietnam.
Recommendations for commercial banks. Recommendations for the State bank of Vietnam. Contribution and limitations of the study. Implication for further research.
58 Commitment I hereby declare that my graduation thesis "Contribution of Human Resources to the Performance of Commercial Banks in the Fourth Industrial Revolution: Empirical Research in Vietnam" is my own research with the guidance of Dr. Pham Thu Thuy. The data used in the article are truthful, the sources cited are clearly stated, and I guarantee that the results in the thesis have not been presented in any other research project. i Acknowledgements After 4 years of studying and researching at the Banking Academy, I am extremely grateful to the teachers who dedicatedly taught and imparted knowledge to help me better understand the operations in my future working environment.
In particular, I would like to sincerely thank Ms. Pham Thu Thuy for her dedicated guidance and help in completing this graduation thesis. Thanks to her dedicated guidance and direction, I have gained valuable knowledge and experience not only in the field of research and academia in particular but also in life, work, and society in general. Due to time limitations as well as limited personal capacity, my graduation thesis cannot avoid shortcomings.
Therefore, I respectfully hope to receive your comments to make this thesis more complete. Thank you sincerely! Ha Noi, 8th May , 2024 Student Thai Vu Hoang Long ii List of abbreviations Acronyms Original CBs Commercial Banks TA Total Assets SE Shareholders’ equity ROA Return on Total Assets ROE Return on Shareholders’ Equity REM Random Effects Models FEM Fixed Effects Models NIM Net Interest Margin GDP Gross Domestic Product CPI Consumer Price Index MBS Military Bank Securities VCB Joint Stock Commercial Bank For Foreign Trade Of Vietnam BID Joint Stock Commercial Bank for Investment and Development of Vietnam TCB Vietnam Technological and Commercial Joint Stock Bank STB Saigon Thuong Tin Commercial Joint Stock Bank VPB Vietnam Prosperity Joint Stock iii Commercial Bank MBB Military Commercial Joint Stock Bank ACB Asia Commercial Joint Stock Bank SHB Saigon - Hanoi Commercial Joint Stock Bank VIB Vietnam International Commercial Joint Stock Bank TPB Tien Phong Commercial Joint Stock Bank HDB Ho Chi Minh City Development Joint Stock Commercial Bank LPB Lien Viet Post Joint Stock Commercial Bank iv List of Tables and Graphs List of Tables Table 1: Independent variables and expectations .28 Table 2: Statistical results describe the study sample .34 Table 3: Correlation matrix results between ROA model variables .37 Table 4: Estimated results from three models OLS, FEM and REM of the ROA model .38 Table 5: Test results to find the most suitable model .40 Table 6: Results of testing ROA model defects .41 Table 7: FGLS regression results for ROA model .42 v List of Graphs Graph 1: Vietnam's GDP growth rate in the period 2013 - 2022.18 Graph 2: Vietnam's inflation rate for the period 2013 - 2022 .19 Graph 3: Credit growth rate of Vietnamese commercial banks in the period 2013 - 2022 .21 Graph 4: Growth of Deposits from Customers of Vietnamese commercial banks in the period of 2013 - 2022 .22 Graph 5: Bad debt ratio and provision for loan losses ratio of Vietnamese commercial banks in the period 2013 - 2022 .24 Graph 6: Average number of employees and average employee growth rate of Vietnamese commercial banks in the period 2013 - 2022. The importance of the topic Banks are financial intermediaries that play an important role in the economy, specializing in mobilizing and allocating capital to support various production and business endeavors. Concurrently, banks facilitate the circulation of goods through the facilitation of payment services, considered as the capital circulation system of each country's economy.
Consequently, a bank' performance is not only related to the optimal allocation of resources in society but also exerting significant influence on policy implementation. Particularly in today's economy, banks are an indispensable part, although they do not directly create material wealth for the economy, rather through their own operational mechanisms they play an important role in fostering economic advancement. Amidst the backdrop of global integration and the advent of the fourth industrial revolution, the world has changed rapidly, yielding breakthroughs across various economic domains. Notably, in the wave of digitization in the fields of production and business, finance and credit,.
At the same time, the Covid - 19 pandemic has acted as a catalyst for expediting the digital transformation trajectory in the economy, evidenced by the widespread adoption of non-cash payments during the anti-epidemic quarantine period. This emergent consumer behavior suggests a sustained preference for digital payment methods post-pandemic, indicating a shift towards enduring long-term habits in the realm of financial transactions. Hasebrook and Kirmsse (2016, p. 219) assert that "Banking is people business," highlighting the significant reliance of the banking sector on human factors.
However, in contemporary times, finance and banking have become one of the foremost arenas deeply impacted by the fourth industrial revolution, concurrently experiencing robust growth and the emergence of new opportunities. In recent years, commercial banks (CBs) have continuously grown in scale and service quality, especially with many changes in organizational structure and operating methods. Evidencing this evolution, many banks have built unmanned smart branches, and the emergence of banking models that are fully 1 internet-based. According to forecasts of the Organization for Economic Cooperation and Development (OECD), on average, approximately 9% of occupations face a high risk of being replaced by automation; Meanwhile, between 50% to 70% of jobs can be automated.
Vietnam is a developing country, Google's E-Conomy Report (2023) evaluates Vietnam's digital economic development growth rate as the fastest in Southeast Asia for many consecutive years, outpacing GDP growth. Therefor, is the contribution of human resources in the context of the fourth industrial revolution still as important as before? And how should CBs manage human resources to be effective in this changing context? Research on factors affecting the operational efficiency of CBs has been conducted extensively both domestically and internationally. However, there have not been many researchs on the operational efficiency of CBs conducted with the human resource factors corporated into the analytical model. Prior research on human resources within CBs predominantly focus on elevating human resources quality and enhancing human resource capabilities.
From the above practice, the author decided to choose the topic: "Contribution of Human Resources to the Performance of Commercial Banks in the Fourth Industrial Revolution: Empirical Research in Vietnam". The findings of this research will serve as valuable reference materials for bank administrators in Vietnam, guiding their decisions regarding the recruitment and development of human resources. Furthermore, the research findings hold relevance for other developing nations undergoing swift digital transformation within the finance and banking sector, particularly within the Southeast Asian region. Research objectives and questions 2.
Objectives of the study Research the theoretical and practical basis on the influence of human resources factors on the performance of commercial banks through a regression model, use data of 13 Vietnamese biggest banks in the period 2013-2022. Propose some solutions to improve human resource management and operational results for commercial banks. Research questions The research aims to find answers to the following questions: - Current situation of human resources at commercial banks in Vietnam in the period of 2013 - 2022? - Effects of total number of employees to the performance of commercial banks in Vietnam in the period 2013-2022? - Effects of employee growth rate to the performance of commercial banks in Vietnam in the period 2013-2022? - Effects of employee salary to the performance of commercial banks in Vietnam in the period 2013-2022? - Effects of employee workload to the performance of commercial banks in Vietnam in the period 2013-2022? - Effects of employee productivity to the performance of commercial banks in Vietnam in the period 2013-2022? - Suggestions and recommendations to increase performance for Vietnamese commercial banks through better human resource management. Object and scope of the study - Research object: Contribution of human resources to the performance of commercial banks - Research scope ● Research space: Data collected from 13 commercial banks in Vietnam.The sample was selected from 13 CBs out of 14 CBs of systemic importance in 2024 (The State Bank of Vietnam 2024) (Agribank was eliminated due to insufficient research data).
The digital transformation process is particularly strong in large- scale CBs, so selecting 13 CBs of systemic importance in 2024 is a good sample to conduct this research. ● Research period: Research period from 2013-2022 (10 years) , since 2013 is the year German government launched a program called "Industrie 4.0 Strategy Document 2013), which aims to promote the digitalization of manufacturing processes and the integration of new technologies such as the 3 Internet of Things (IoT), Artificial Intelligence (AI), and Big Data. Up to now, it has spread around the world and become an important part of the fourth industrial revolution. Research Methods Qualitative method Through the collected data, the author uses tables and charts to analyze and compare, in order to understand the factors affecting banks’ performance, and the current business situation of commercial banks in the period 2013 - 2022.
Use statistical methods to generally describe the average value, standard deviation, maximum value, and minimum value of the variables in the research model. Finally, the author synthesizes, analyzes, and explains the findings from the model. Quantitative methods The study uses a multivariate regression method with panel data. The selected dependent variable is return on total assets (ROA).
Independent variables include: total number of employees, employees growth rate, total assets (TA) per total number of employees, revenue per total number of employees, scale of CBs, , shareholders' equity (SE) to TA ratio, outstanding loan to TA ratio, customer deposits to TA ratio, deposit to TA ratio, operating expenses to operating income ratio, provisions for loan losses on total outstanding loans ratio, etc.