Abstract
Digital transformation has become a strategic priority for commercial banks seeking to improve operational efficiency and competitiveness. This study examines the determinants of digital transformation in Vietnamese commercial banks by considering bank-specific characteristics, macroeconomic conditions and banking market concentration. Using panel data from 25 commercial banks over the period 2013–2024, the study employs pooled ordinary least squares, fixed effects model, random effects model, robust random effects estimation and the two-step system generalized method of moments. The results show that bank size and GDP growth positively influence digital transformation, whereas inflation has a significant negative effect. Profitability, non-performing loans and state ownership do not exhibit robust effects across different estimation methods. More importantly, banking market concentration, measured by the Herfindahl–Hirschman index, has a consistently negative and significant impact, indicating that stronger market competition encourages banks to accelerate digital transformation. These findings extend the existing literature by highlighting banking market structure as an important external determinant of digital transformation. The study provides practical implications for policymakers and commercial banks in promoting digital transformation through a competitive banking environment, macroeconomic stability and sustained technological investment.