Digital banking and labor demand in Vietnamese commercial banks

In a bank-based economy such as Vietnam, commercial banks play a pivotal role in financial intermediation and broader economic performance. This study examines the association between ICT-based digital banking readiness and labour-demand outcomes in Vietnam’s commercial banking sector. We compile an unbalanced panel of 24 Vietnamese commercial banks for 2010–2022. The bank-level ICT Index from the annual Vietnam ICT Index reports serves as a proxy for this readiness. Labour demand is captured by employment and personnel expenses. Using two-way fixed effects models with bank and year fixed effects and bank-clustered standard errors, the baseline estimates show positive and statistically significant associations between lagged ICT readiness and both outcomes. In economic terms, a 0.10-point rise in the ICT Index corresponds to approximately 4.9% higher employment and 5.5% higher personnel expenses. Distributed-lag estimates show positive cumulative associations over two years. The coefficients also remain positive in most growth-control models. The employment result is relatively stable across most reported specifications. The personnel-expense coefficient becomes small and statistically insignificant after bank-specific trends are included. The large-bank coefficient for personnel expenses is positive and significant only at the 10% level. The estimated difference between large and small banks remains uncertain. The comparison shows that employment and personnel expenses capture different dimensions of labour adjustment. The employment result is relatively stable, whereas the personnel expense result is sensitive to bank-specific development paths.