Assessing the influence of digital transformation strategy on capital structure in Vietnamese commercial banks: An empirical investigation

Abstract

This study explores the transformative effects of digital innovation on the capital structure of Vietnamese commercial banks, utilizing a comprehensive dataset from 2005 to 2023. Datas are collected from the Information and Communication Technology (ICT) Readiness Index of Vietnamese Commercial Banks, reported by the Ministry of Information and Communications of Vietnam and financial statements from over 30 listed banks. The study demonstrates that digital transformation exerts a significant positive influence on both leverage and debt levels. Larger banks exhibit higher levels of digital adoption, which, in turn, enhances their debt capacity while reducing leverage ratios. This research contributes to the literature by extending the discourse on the strategic implications of digital transformation for capital structure, an area that has received limited attention. Furthermore, the findings emphasize the dual role of digital transformation in improving operational efficiency and elevating financial obligations, offering practical insights for policymakers, banking institutions, and stakeholders. The study also identifies potential risks associated with high fixed costs of digitalization and suggests tailored strategies for sustainable integration of digital technologies in Vietnam's banking sector