Abstract
Capital adequacy can strengthen a bank’s resilience while reducing contemporaneous returns to shareholders
when additional capital is not matched by higher earnings. This study examines that relationship in a reported
panel of 24 Vietnamese commercial banks over 2014–2025, incorporating book capitalization, operating costs,
lending intensity, credit-risk provisioning, digitalisation, and common economic conditions. The empirical
record contains 288 bank-year observations and estimates from pooled ordinary least squares, fixed effects,
random effects, and feasible generalized least squares. The reported capital-adequacy coefficient is negative
across all four estimators. In the generalized least squares specification, a one-percentage-point higher capital
adequacy ratio is associated with a 0.825-percentage-point lower return on equity, with a nominal 95%
confidence interval from −1.044 to −0.606 percentage points. Book equity capitalization and the digitalisation
indicator have positive conditional associations. Exploratory subgroup results indicate a larger negative capital
coefficient among larger banks, but no formal between-group comparison is available. The analysis
distinguishes risk-weighted capital adequacy from book equity funding and a digitalisation indicator from a
causal technology effect. Measurement ambiguities, unverified terminal-year data, and limitations in the
reported diagnostic sequence mean that these estimates remain provisional. The appropriate managerial
inference is not to weaken capital buffers, but to examine whether capital allocation, operating capability, and
risk-adjusted earnings develop together. Independent verification and re-estimation are required before
submission.
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