Competition level, bank size, and financial stability: Empirical evidence from Vietnamese commercial banks

Abstract

This study investigates the relationship between competition, bank size, and financial stability among Vietnamese commercial banks. Utilizing data from 30 banks over the 2011–2023 period, the research employs models including Pooled OLS, FEM, REM, FGLS, and SGMM. The findings reveal that competition adversely affects financial stability, while bank size contributes positively. Additionally, the study highlights the moderating role of bank size in the competition-stability nexus, indicating that larger banks are less sensitive to competitive pressures compared to smaller counterparts. The results provide valuable insights for policymakers aiming to enhance the financial stability of Vietnam’s banking sector through strategic competition management and bank size optimization