Abstract: - To maintain sustainable development, business management strategy of modern banks these days

cannot neglect international standards. Hence, the main aim of the current study is to explore the factors that

influence the readiness of banks in implementation of Basel III requirements based on the context of the

Vietnamese banking system. To achieve clear explanations, this research utilizes the data set of 211

questionnaires collected from senior and middle-level managers as well as other management personnel related

to Basel III implementation at 20 Vietnamese commercial banks, and performs the PLS-SEM by applying

Smart PLS 3 software. The analysis results indicate that both awareness and expected economic benefits have

positive impacts on the readiness of banks to implement Basel III requirements. Meanwhile, the effect of

available resources is negative but not statistically significant. It can be said that the study provides one of the

first evidence to shed new light on the factors that impact the readiness of banks in complying with strict

Received: March 29, 2024. Revised: August 22, 2024. Accepted: September 24, 2024. Published: October 18, 2024.

Following the global financial crisis, the Basel

Committee on Banking Supervision (“Basel

Committee”) developed an international framework

to improve liquidity governance, risk management

and financial stability in the banking sector. The

first version of Basel III was issued by the Basel

Committee in 2010 following the 2007–2008

of the legal and supervisory framework of the

banking industry to enhance stability of the financial

system and improve risk management as well as

increase transparency in the banking system [1], [2].

Some assessments [3], [4]believe that Basel III was

implemented to limit the shortcomings of Basel II

economic activities seem to depend greatly on the

domestic banking system [9], [10], [11], [12]. In

other words, the stability and sustainable

development of banks is a solid premise for

economic development in this country [13], [14],

[15]. For that reason, there have been great efforts in

establishing international standards for the domestic

banking system in recent years. One of the most

obvious efforts is that relevant regulations have

been issued to create a legal corridor for the

quickly issued Official Dispatch No. 1601/NHNN-

TTGSNH dated March 17, 2014 on selecting 10

banks to pilot Basel II and proceed to apply Basel II

to all domestic banks, and at the same time issued a

series of related documents creating a legal

framework guiding the implementation of the three

pillars of Basel II.

Starting from the above analytical context, the goal

of this study is to evaluate the factors affecting the

readiness of Vietnamese commercial banks

and readiness to implement Basel III of VNCBs.

However, the positive effect from perception is

relatively stronger than the effect from expected

benefits. In addition, the empirical results also show

a negative relationship between the availability of

necessary resources and the readiness to implement

Basel III of VNCBs, but this relationship is not

statistically significant. To the best of the authors'

knowledge, this is the first empirical study in

Vietnam to evaluate the factors affecting the

main contents. The first section will present a

literature review of existing studies. The second part

presents the research method and data collection.

The fourth part is the empirical findings. The final

section presents a summary of conclusions

regarding the main results.

capital requirements because these indicators affect

the risk management of banks. [24]conducted an

assessment of the methods used by commercial

banks in implementing Basel III. A total of about 43

commercial banks in Kenya were selected and

studied. The results show that banks in this country

have cut back on lending activities and dividend

payments. Furthermore, to overcome the challenges

of implementing Basel III, these banks also focus

more on quality assets with longer maturities,

order to take advantage of the benefits from Basel

III, banks need to have effective solutions.

However, the study also points out challenges in the

process of implementing Basel III in this country,

including the lack of data management capabilities,

risk reporting systems and technology.

[26]conduct an overview of Basel III regulations.

The authors conclude that the main goal of Basel III

is to improve the safety of banking operations and

increase both the quality and quantity of banks'

policymakers and financial sector participants that

implementing the Basel rules could impose a

significant cost burden on the banking and financial

systems. the economy in general [4], [30], [31].

In this field, the main goal of this study is to re-

examine the above issue through assessing the

factors affecting the readiness of Vietnamese

commercial banks in implementing Basel III

standards. Based on the review of existing literature

as well as the research purposes presented above,

readiness to implement Basel III of Vietnamese

commercial banks and the awareness of Vietnamese

commercial banks about Basel III;

H3: There exists a positive relationship between the

readiness to implement Basel III of Vietnamese

commercial banks and the necessary available

education level. Table 2 below provides descriptive

statistics about the characteristics of these survey

participants. Accordingly, approximately 55% of

respondents were male and more than 45% were

female. Regarding work experience in the banking

sector, the majority of survey participants have over

5 years of experience, specifically accounting for

nearly 48% of the total number of respondents. Next

is the proportion of survey participants with

experience from over 3 to 5 years, accounting for

degree is nearly 11%. High educational level along

4.3. Results of Hypotheses Testing

change in the dependent variable is explained by the

independent variables at 44.1%. In other words,

44.1% of the variation in readiness to implement

Basel III is explained by components such as

benefits, awareness and available resources.

The regression results show that the estimated

coefficient of benefits is as expected. Accordingly,

apply Basel III will increase by 0.121. point. Thus,

this result supports hypothesis H1 about: "There

exists a positive relationship between the readiness

to implement Basel III of Vietnamese commercial

banks and the expected benefits from Basel III".

From a cognitive perspective, the estimated

coefficient is positive with a value of 0.618 at the

time. Indeed, while a number of recent empirical

studies have shown the important role of both

technology investment and knowledge-based

management in banking business [9], [10], [39], the

fact that managers ignore this factor can be a

significant shortcoming in the business management

strategy according to international standards that

Basel III brings.

Although the research has achieved certain

successes, there are still some shortcomings that

foreign banks operating in Vietnam and analyse and

compare with the results of this study to have more

clear view about the level of readiness to implement

Basel III of Vietnamese banks.

Furthermore, for future research, it is believed that

future studies should be conducted related to

different aspects of this research topic, for example,

possible challenges when implementing and

applying Basel III standards, or as the relationship

between market risk management and Basel III

The authors would like to thank Reviewers and

Editors for their valuable comments that helped to

enhance the quality of our paper.

References:

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[14] C. H. Lu and T. V. Nguyen, “How Does

[16] S. Ben Naceur, K. Marton, and C. Roulet,

[17] C. Roulet, “Basel III: Effects of capital and

[19] A. Mirchandani and S. Rathore, “Basel III

[20] K. Boora and K. Jangra, “Preparedness level

[22] S. Norbaya Yahaya, N. Mansor, and K.