To list or not to list, that is the question: new evidence from the performance of Vietnamese commercial banks

Abstract

Purpose

This paper aims to investigate the decisions of listing for Vietnamese banks and the impact of listing on bank performance.

Design/methodology/approach

A longitudinal data set of 30 commercial banks in the period of 2006–2018 with various univariate and multivariate tests is used.

Findings

This study found that listing is positively associated with bank profitability. The results are consistent even after the control for potential endogeneity problems by propensity score matching methodology and Heckman selection bias models. Further analysis suggests some new alternative channels for the positive impact, namely, the increased quality of information disclosure, technological development and income diversification of commercial banks after listing.

Practical implications

Hence, this paper provides recommendations and policy implications for regulatory bodies regarding the listing of commercial banks in Vietnam.

Originality/value

The contributions to the literature are three-folds. First, this study contributes to a strand of literature on the impact of going public [initial public offering (IPO)/listing] of financial institutions on their performance. While the literature on non-financial firm performance post-going public is ample, few have directly considered the IPO/listing of banks and other financial institutions. Second, in further looking at the impact of listing on bank performance, this study also sheds some light on the new possible channels of the effect and provides evidence of new channels. Then, last but not least, the case of Vietnam could possibly yield interesting results for a transitory stock market. From the evidence, the recommendations and policy implications for a listing of Vietnamese banks are provided.

Citation

Le, T.Q., Duong, H.N. and Nguyen, P.T. (2021), "To list or not to list, that is the question: new evidence from the performance of Vietnamese commercial banks", Journal of Financial Regulation and Compliance, Vol. 29 No. 2, pp. 163-186. https://doi.org/10.1108/JFRC-03-2020-0026