CAPITAL STRUCTURE OPTIMIZATION AND STRATEGIC FINANCIAL MANAGEMENT IN COMMERCIAL BANKS: EVIDENCE FROM VIETNAM

The main objective of this paper is to elucidate certain key issues related to the structural shift of investment capital in commercial banks toward a more rational framework. To date, the number of published studies examining capital structure change and the internal reallocation of capital across specific business activities within joint-stock commercial banks remains limited. This study employs the vector method, which is also known as the cosine coefficient approach, which is grounded in linear algebra and measures the cosine of the angle between two vectors. This method was initially introduced by the context of international trade research and was subsequently extended through the application of the cosine coefficient to quantify the degree of structural shift between two capital allocation structures. Based on a secondary dataset collected by the author up to 2024 for the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), the paper proposes several policy recommendations, including (i) developing and formulating policies for managing investment portfolio structures; (ii) diversifying and improving forms of investments; (iii) expanding investment and trading activities in floating-rate debt securities issued by highly creditworthy institutions; (iv) strengthening the intermediary and bridging role of VietinBank Securities and other bank subsidiaries; and (v)promoting the reallocation of investment capital to green sectors. These recommendations are expected to be beneficial for joint-stock commercial banks in developing economies worldwide.