Financial Restructuring and the Overall Financial Performance of the Commercial Banks in Vietnam Aim: A research is done to test the overall study of the financial restructuring on financial performance of commercial banks in Vietnam and their relationship to other important economic factors. Introduction: Globalization in the financial markets has created a very competitive environment for international commercial banks. In such an environment, the overall financial performance of commercial banks has become significant (Harker & Zenios, 2000; Isik & Hassan, 2002). Commercial banks have to work more effectively and efficiently to decrease their costs. They have to grow and apply new technologies and provide new products and services to compete in this environment. In fact, in this competitive market, the banking systems of many developing economies are still very weak and ineffective. To resolve this problem, financial restructuring had been done to improve the financial performance of banks (Denizer et al., 2007; Isik & Hassan, 2002; Zhao et al., 2010). These restructuring activities will help banks to improve their financial performance, better allocate the resources, initiate innovations, increase profits, improve service quality for customers and maintain the stability in the financial system (Osoro, 2014). In many cases, financial restructuring is no longer an option, and it is indeed one of the critical actions for the survival and growth of a bank (Rogovsky et al., 2005). Vietnam has been a fast- growing country in the South East Asia region in the past centuries. However, with the hit of the world crisis in 2007, the commercial accounting system in Vietnam faced many difficulties, especially shortcomings in finance, high rate of bad debts, risks in liquidity issues, and legal matters. New commercial banks were established, but many were under pressure to survive and grow. Therefore, financial restructuring to increase the overall financial performance and ensure the survival and development of banks is necessary. In the past, there have been many studies on the financial restructuring and performance of commercial banks in Vietnam, such as research by Tran et al. (2014), Dao and Nguyen (2020), Tran (2020). However, no single research looks at the financial restructuring of commercial banks in Vietnam for the period after 2008. This is a significant time after the world financial crisis. Therefore, our research is timely Methods and Materials: The research data were collected from the commercial banks trading on HOSE and HNX from 2008-to 2018. The data used in this research is the Unbalanced Panel Data. The data was collected from 2008 because Vietnam had joined WTO in 2007, and the world financial crisis started in 2008. The commercial banks in Vietnam had performed many operational restructurings since then. The secondary data was collected from the audited financial reports of the commercial banks. FPt = f (a, FPt-1, LITE, ETA, NPLit, SIZE, GDP, INF, RE1, RE2, ut) This model's dependent variables are financial ratios (ROA, ROE) labelled as FP. The independent variables are: (1) financial results of commercial banks interrelated through the time ((FPt-1); Debt ratio (LITE); (3) Owners' capital/ total assets ratio (ETA); (4) Bad debt ratio (NPL); Control variable is commercial banks' size (SIZE); Macro variables include: economic growth (GDP) and inflation rate (INF); Dummy variables include: (1) RE1it: restructuring in period 1 from 2012-2015, 0: before restructuring period 2008-2011, restructuring in period 2 from 2016-2018); (2) RE2it (1: restructuring in period 2 from 2016-2018, 0: before restructuring period 2008-2011, restructuring in period 1 from 2012-2015). Other factors: a (the intercept), i (banks), t (year) The study applied basic panel data analysis methods and estimated two different models. The findings are given below. Findings: The results are presented in two panels. Panel one is comprised of Columns 2 to Column 5. Panel two consists of Columns 6 to 9. Variables L.ROA L.ROE LITE NPL SIZE GDP INF RE1 RE2 cons ROA 0.361*** [7.71] [-1.09] 0.00265*** ROA 0.253*** [4.98] [5.49] 0.00188 -0.000402* -0.000331** -0.000402** -0.000448*** [-2.55] [-1.64] [-5.38] 0.0532*** 0.0881*** 0.130*** [3.33] -0.0265 [4.63] -0.00852* [-0.30] 0.00781*** [4.80] 0.00373* ROA 0.361*** [7.71] [-2.55] 0.0532*** [3.33] -0.0265 CAPM [-1.09] 0.00265*** [5.49] 0.00188 ROA 0.311*** [17.90] [-5.65] [-4.27] -0.129*** -0.0362*** [13.39] -0.0189* [-1.11] 0.00493*** [1.38] [2.58] [1.38] [5.94] -0.00177** -0.00219*** -0.00177** -0.00165*** [4.83] 0.00289*** [-2.36] [-8.87] [-2.36] [-2.94] -0.00712*** -0.0108*** -0.00712*** -0.00750*** [-6.77] [-6.77] [-7.33] [-8.73] -0.00788*** -0.0146*** -0.00788*** -0.00798*** [-4.27] -0.0362*** ROE TIPM 0.477*** 0.301*** [9.01] [5.07] -0.00281* -0.00072* [-1.78] 0.0792* [4.62] 0.0154* [0.50] -0.262 [-1.10] [0.38] 0.0236*** 0.0645*** [1.14] -0.0160** [-2.13] -0.0635*** ROE [-6.04] -0.0670*** [-7.95] [-3.57] -0.0832*** -0.293*** [-0.36] 0.354* [1.88] 0.109* [3.92] 0.0283** [1.97] -0.0203*** ROE 0.477*** [9.01] -0.00281* LA AM [-1.78] 0.0792* [0.50] -0.262* [-1.10] 0.0236*** [4.62] 0.0154* [1.14] -0.0160** [-2.73] [-2.13] -0.0955*** -0.0635*** [-6.45] [-6.04] -0.129*** -0.0670*** [-4.90] [-3.57] -1.039*** -0.293*** ROE 0.347*** [9.95] -0.00181** [-1.52] 0.767*** [3.45] -0.0397** [-0.35] 0.0516*** [3.06] 0.0206*** [2.87] -0.0177*** [-7.25] -0.0772*** [-4.96] -0.0906*** [-4.91] -0.859*** Here column 1 shows variables in the model. Subsequent four-column shows outcomes with ROA as dependent variables and four different methods termd as M1, M2, M3 & M4. At the same time, the following four columns show output with dependent variable ROE and four different methods M!, M2, M3 & M4. Brief Findings: The results showed that restructuring account payables and capital restructuring are needed. Increasing owners' capital and decreasing payables would increase financial performances; bad debt restructure would decrease the bad debts; increased credit quality requirements would increase financial performance. However, the restructuring for 2012-2015 and 2016-2018 did worsen the financial performance. One of the limitations of this research is that it only covers the period before and during the restructuring time. The data need to be collected on 2 a more extended period to evaluate the influence of restructuring on commercial banks after the restructuring period. Future research could add more data covering three to five years after restructuring. Besides that, we did not make a difference between banks in this research. Therefore, this could be another limitation that could be considered for further research. Q1 A: Does the study cater to the study's financial crisis period? Answer. Yes 2008 B: Based on findings which method (M1 to M4) is more robust and suitable while using the ROA as a dependent variable? C: Based on findings which method (M1 to M4) is more robust and suitable while using the ROE as a dependent variable? D: Which is the most critical macroeconomic factor to improve the overall financial performance of Vietnam banks, while using Method 3 and Method 4 (Use ROA)? E: Which is the most critical determinant to improve the overall financial performance of Vietnam banks, while using Method 1 and Method 2 (use ROE)? F: What are recommendations based on findings presented in the Last columns of both panels. G: Comment on the financial restructuring of Vietnam based on the Financial reforms program of IMF. Financial Restructuring and the Overall Financial Performance of the Commercial Banks in Vietnam Aim: A research is done to test the overall study of the financial restructuring on financial performance of commercial banks in Vietnam and their relationship to other important economic factors. Introduction: Globalization in the financial markets has created a very competitive environment for international commercial banks. In such an environment, the overall financial performance of commercial banks has become significant (Harker & Zenios, 2000; Isik & Hassan, 2002). Commercial banks have to work more effectively and efficiently to decrease their costs. They have to grow and apply new technologies and provide new products and services to compete in this environment. In fact, in this competitive market, the banking systems of many developing economies are still very weak and ineffective. To resolve this problem, financial restructuring had been done to improve the financial performance of banks (Denizer et al., 2007; Isik & Hassan, 2002; Zhao et al., 2010). These restructuring activities will help banks to improve their financial performance, better allocate the resources, initiate innovations, increase profits, improve service quality for customers and maintain the stability in the financial system (Osoro, 2014). In many cases, financial restructuring is no longer an option, and it is indeed one of the critical actions for the survival and growth of a bank (Rogovsky et al., 2005). Vietnam has been a fast- growing country in the South East Asia region in the past centuries. However, with the hit of the world crisis in 2007, the commercial accounting system in Vietnam faced many difficulties, especially shortcomings in finance, high rate of bad debts, risks in liquidity issues, and legal matters. New commercial banks were established, but many were under pressure to survive and grow. Therefore, financial restructuring to increase the overall financial performance and ensure the survival and development of banks is necessary. In the past, there have been many studies on the financial restructuring and performance of commercial banks in Vietnam, such as research by Tran et al. (2014), Dao and Nguyen (2020), Tran (2020). However, no single research looks at the financial restructuring of commercial banks in Vietnam for the period after 2008. This is a significant time after the world financial crisis. Therefore, our research is timely Methods and Materials: The research data were collected from the commercial banks trading on HOSE and HNX from 2008-to 2018. The data used in this research is the Unbalanced Panel Data. The data was collected from 2008 because Vietnam had joined WTO in 2007, and the world financial crisis started in 2008. The commercial banks in Vietnam had performed many operational restructurings since then. The secondary data was collected from the audited financial reports of the commercial banks. FPt = f (a, FPt-1, LITE, ETA, NPLit, SIZE, GDP, INF, RE1, RE2, ut) This model's dependent variables are financial ratios (ROA, ROE) labelled as FP. The independent variables are: (1) financial results of commercial banks interrelated through the time ((FPt-1); Debt ratio (LITE); (3) Owners' capital/ total assets ratio (ETA); (4) Bad debt ratio (NPL); Control variable is commercial banks' size (SIZE); Macro variables include: economic growth (GDP) and inflation rate (INF); Dummy variables include: (1) RE1it: restructuring in period 1 from 2012-2015, 0: before restructuring period 2008-2011, restructuring in period 2 from 2016-2018); (2) RE2it (1: restructuring in period 2 from 2016-2018, 0: before restructuring period 2008-2011, restructuring in period 1 from 2012-2015). Other factors: a (the intercept), i (banks), t (year) The study applied basic panel data analysis methods and estimated two different models. The findings are given below. Findings: The results are presented in two panels. Panel one is comprised of Columns 2 to Column 5. Panel two consists of Columns 6 to 9. Variables L.ROA L.ROE LITE NPL SIZE GDP INF RE1 RE2 cons ROA 0.361*** [7.71] [-1.09] 0.00265*** ROA 0.253*** [4.98] [5.49] 0.00188 -0.000402* -0.000331** -0.000402** -0.000448*** [-2.55] [-1.64] [-5.38] 0.0532*** 0.0881*** 0.130*** [3.33] -0.0265 [4.63] -0.00852* [-0.30] 0.00781*** [4.80] 0.00373* ROA 0.361*** [7.71] [-2.55] 0.0532*** [3.33] -0.0265 CAPM [-1.09] 0.00265*** [5.49] 0.00188 ROA 0.311*** [17.90] [-5.65] [-4.27] -0.129*** -0.0362*** [13.39] -0.0189* [-1.11] 0.00493*** [1.38] [2.58] [1.38] [5.94] -0.00177** -0.00219*** -0.00177** -0.00165*** [4.83] 0.00289*** [-2.36] [-8.87] [-2.36] [-2.94] -0.00712*** -0.0108*** -0.00712*** -0.00750*** [-6.77] [-6.77] [-7.33] [-8.73] -0.00788*** -0.0146*** -0.00788*** -0.00798*** [-4.27] -0.0362*** ROE TIPM 0.477*** 0.301*** [9.01] [5.07] -0.00281* -0.00072* [-1.78] 0.0792* [4.62] 0.0154* [0.50] -0.262 [-1.10] [0.38] 0.0236*** 0.0645*** [1.14] -0.0160** [-2.13] -0.0635*** ROE [-6.04] -0.0670*** [-7.95] [-3.57] -0.0832*** -0.293*** [-0.36] 0.354* [1.88] 0.109* [3.92] 0.0283** [1.97] -0.0203*** ROE 0.477*** [9.01] -0.00281* LA AM [-1.78] 0.0792* [0.50] -0.262* [-1.10] 0.0236*** [4.62] 0.0154* [1.14] -0.0160** [-2.73] [-2.13] -0.0955*** -0.0635*** [-6.45] [-6.04] -0.129*** -0.0670*** [-4.90] [-3.57] -1.039*** -0.293*** ROE 0.347*** [9.95] -0.00181** [-1.52] 0.767*** [3.45] -0.0397** [-0.35] 0.0516*** [3.06] 0.0206*** [2.87] -0.0177*** [-7.25] -0.0772*** [-4.96] -0.0906*** [-4.91] -0.859*** Here column 1 shows variables in the model. Subsequent four-column shows outcomes with ROA as dependent variables and four different methods termd as M1, M2, M3 & M4. At the same time, the following four columns show output with dependent variable ROE and four different methods M!, M2, M3 & M4. Brief Findings: The results showed that restructuring account payables and capital restructuring are needed. Increasing owners' capital and decreasing payables would increase financial performances; bad debt restructure would decrease the bad debts; increased credit quality requirements would increase financial performance. However, the restructuring for 2012-2015 and 2016-2018 did worsen the financial performance. One of the limitations of this research is that it only covers the period before and during the restructuring time. The data need to be collected on 2 a more extended period to evaluate the influence of restructuring on commercial banks after the restructuring period. Future research could add more data covering three to five years after restructuring. Besides that, we did not make a difference between banks in this research. Therefore, this could be another limitation that could be considered for further research. Q1 A: Does the study cater to the study's financial crisis period? Answer. Yes 2008 B: Based on findings which method (M1 to M4) is more robust and suitable while using the ROA as a dependent variable? C: Based on findings which method (M1 to M4) is more robust and suitable while using the ROE as a dependent variable? D: Which is the most critical macroeconomic factor to improve the overall financial performance of Vietnam banks, while using Method 3 and Method 4 (Use ROA)? E: Which is the most critical determinant to improve the overall financial performance of Vietnam banks, while using Method 1 and Method 2 (use ROE)? F: What are recommendations based on findings presented in the Last columns of both panels. G: Comment on the financial restructuring of Vietnam based on the Financial reforms program of IMF