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CHAPTER 1: INTRODUCTION
1.1 The necessity of the research
Activities of banks affect the stability of monetary policy in
many countries directly. Facing challenges in intergration, most
countries in the world recognize that competition forces their
economies to grow. In order to improve the effectiveness of the
banks’competition strategies, it is necessary to diversify
business activities for limitting and diversifing risks and
increase the banks’ revenue.
However, there are many agruments about the impact of
competition and diversification on financial stability of banks’
perfromance. Whether competition and diversification pose a
threat to stability of banks or not? And how are all factors
considered in each statement or the environment where there
are different effects?
In Vietnam, in general, economic instability has caused
many losses to the banking system in all aspects. The levels of
competition among banks have become more intense. As a
result, commercial banks have been changing their operation by
expanding the scope of their activities to increase income.
However, bank costs and risks also increase and impact on
banking stability. So, should the bank swap this opportunity to
increase income and competition with its stability?
Be aware of the urgency of the impact of diversification and
competition on stability of bank, the thesis purposes to clarify
this problem. They are very practical, important objectives that
