Human Capital and Bank Performance: Does Size Matter?
Round 1
Reviewer 1 Report
Comments and Suggestions for AuthorsMain Question Addressed by the Research
The central question explored in this study is whether bank size plays a moderating role in the relationship between human capital and bank performance within the Vietnamese banking sector. Specifically, the author investigates if larger banks derive greater benefits from investments in human capital compared to smaller banks. This question is framed within the context of resource-based and economies of scale theories, which traditionally suggest that scale can amplify the returns from strategic resources such as human capital. The study is set against the backdrop of Vietnam's developing financial system, making the inquiry timely and significant for both scholars and practitioners seeking to understand performance dynamics in emerging markets.
Originality and Relevance to the Field
This research offers a noteworthy contribution in terms of originality and relevance. While the positive relationship between human capital and organizational performance is well established, this study is among the first to assess whether bank size enhances or moderates this relationship in the Vietnamese context. Previous studies have tended to examine these factors independently or within more developed economies, by focusing on a developing market, the author addresses a clear gap in the literature, shedding light on how strategic resources interact in a transitional economic environment. Moreover, the inclusion of advanced estimation techniques, such as Bayesian analysis, enhances the methodological novelty and robustness of the study.
Methodological Improvements to Consider
The study is methodologically sound, using panel data from 26 commercial banks over a 15-year period and employing a combination of regression models, including Pooled OLS, Fixed Effects, Random Effects, Feasible Generalized Least Squares (FGLS), and Bayesian estimation. However, there are several areas where the methodology could be further enhanced.
First, the use of bank size as a moderating variable is limited to a single dimension—total assets. Incorporating alternative size metrics such as number of employees, revenue, or market share could provide a more comprehensive picture.
Second, the methodology (point 3.2) needs to be better described.
Finally, I have doubts if the study focuses exclusively on Vietnamese commercial banks, excluding other types such as foreign-owned or joint-venture banks. In that case, including these entities in future research could improve the generalizability of the findings.
Author Response
please see the attachment
Author Response File: Author Response.pdf
Reviewer 2 Report
Comments and Suggestions for AuthorsThe manuscript entitled "Human Capital and Bank Performance: How Size Matters?" investigates an important topic in banking literature—the effect of human capital on bank performance, with bank size introduced as a moderating factor. Utilizing a dataset from 26 Vietnamese commercial banks over the period 2008–2023 and applying robust statistical methods, including FGLS and Bayesian estimations, the study produces relevant findings grounded in both the Resource-Based View (RBV) and economies of scale theory. While the empirical approach is commendable and the data sources are reliable, the manuscript requires substantial revision to meet the academic and editorial standards expected by JRFM.
Comments and Suggestions for Authors:
- Page 3, Lines 93–106 (Hypotheses Formulation): The current transition from the literature review to the hypothesis statement is abrupt. Authors should provide a stronger thematic bridge, clearly linking the theories (RBV, economies of scale) and prior empirical gaps to the rationale for each hypothesis. A short paragraph summarizing the empirical gaps and emphasizing the novelty of introducing a moderating effect of bank size would help clarify the contribution.
- Page 6, Lines 238–241 (Justification of ROA vs ROE): The preference for ROA as the primary performance measure is reasonable but under-explained. Authors should cite sources that justify ROA's superiority in capturing financial intermediation effectiveness, especially in markets where equity funding is not the dominant model. For instance, refer to recent comparative studies in emerging markets where ROA is used over ROE due to deposit-heavy structures.
- Page 8, Lines 328–339 (Descriptive Statistics): While Table 2 summarizes the sample's basic metrics, the interpretation lacks depth. Discuss what the spread and skewness in HCE, ROA, and RAROA imply about bank performance diversity. Are certain banks consistently outperforming others in human capital investment returns? Are outliers present? These aspects could provide contextual understanding of the Vietnamese banking landscape.
- Page 10, Lines 379–380 (Vague Phrasing): The phrase "create more services" should be replaced with "expand their portfolio of banking services and financial products to meet diverse customer needs." This rephrasing better reflects the strategic capabilities enabled by human capital development.
- Page 10, Lines 403–406 (Moderating Role of Size): While the insignificant moderating effect is statistically valid, it weakens the theoretical foundation unless critically explained. Authors should elaborate more on why this finding may deviate from theory, possibly by including contextual differences in HR management strategies across banks of varying sizes or considering regional regulatory practices that equalize human capital emphasis.
- Page 11, Lines 444–447 (Bayesian Interpretation): The Bayesian results show posterior probabilities but lack interpretative context. Authors should explain the meaning of high probability values (e.g., 89.5% for HCE effect) in the Bayesian framework and discuss how credible intervals reinforce or challenge FGLS results. This helps substantiate model robustness.
- Page 12, Lines 478–480 (Policy Recommendations): Recommendations are broad and not immediately actionable. Specify measures such as setting up a national human capital benchmarking system for banks or encouraging banks to allocate a minimum percentage of their budget to talent development. Also, consider suggesting regular performance reviews tied to human capital metrics.
- Throughout the Discussion Section: The discussion tends to repeat results rather than interpret them deeply. A more engaging discussion would compare the study's findings with existing regional or global research and highlight how this contributes to or challenges the consensus. Introduce contrastive scenarios where similar or dissimilar patterns have emerged.
Minor Concerns:
- Page 1, Line 3 (Title): "How Size Matters?" is grammatically incorrect. Please revise to "Does Size Matter?", which is more suitable and formal for academic discourse.
- Page 2, Line 20 (Abstract): Edit to "macroeconomic conditions" for proper usage. Ensure the abstract reflects that Bayesian methods were used as a robustness check.
- Page 5, Lines 171–179: Consider breaking this dense citation paragraph into two, grouping Vietnamese studies separately from international studies. Additionally, briefly summarize the collective implication of these works to transition smoothly into your study's positioning.
- Page 6, Table 1 (Variable Definitions): Add units where applicable (e.g., percentages for ratios), and italicize variables (ROA, HCE) to improve formatting clarity. Use a consistent style for formulas and ensure they are explained in full before use.
- Page 8, Table 2 (Descriptive Stats): It is advisable to include a note indicating whether the variables have been winsorized to manage outliers. Also, consider adding skewness/kurtosis measures if relevant.
- Formatting: Ensure that all Latin names and abbreviations are italicized (e.g., Thunnus albacares if mentioned). Maintain consistent decimal places across all tables (e.g., 2 or 3 digits after the decimal).
- Language Editing: Sentences like "the bank can increase its performance by using its human capital" should be rewritten for conciseness and clarity. Consider engaging a native English editor to ensure fluency and remove redundancies such as repeating "creativity" in Line 480.
The study has the potential to contribute meaningfully to the literature on intellectual capital and banking performance in emerging markets. However, improvements are needed in hypothesis development, analytical interpretation, writing clarity, and the integration of findings with theory. A major revision is warranted to ensure scholarly and editorial rigor.
Comments for author File: Comments.pdf
Author Response
please see the attachment
Author Response File: Author Response.pdf
Reviewer 3 Report
Comments and Suggestions for AuthorsComments and Suggestions for Authors
- Sample selection
The final sample comprises 367 observations from 26 banks over 16 years, suggesting substantial missing data (~11.8%). However, the methodology section in the article does not explain:
- Which banks were excluded?
- How was the missing data handled?
- Were all banks present in all the years, or was this an unbalanced panel?
Suggestion:
- Provide a detailed table or appendix listing all included banks, years covered, and missing data rationale.
- Explain how missing observations were handled and whether this may affect representativeness or introduce bias.
- Time period of data
The panel dataset covers a period from 2008 to 2023, covering several phases of financial, regulatory, and structural transformation in the Vietnamese banking sector, including:
- The global financial crisis aftermath (2008-2011),
- The restructuring and consolidation of the banking system (2012-2015),
- The digitization and Basel II compliance (2016-2019),
- The COVID-19 shock and post-pandemic recovery (2020-2023).
The author seems to assume that the model is homogeneous despite the long research period having many fluctuations. In addition, she included two control variables (GDP and CPI), but I will suggest the following:
Suggestion:
- Robustness test with 2-period truncated data (2008-2015 and 2016-2023).
- Run split-period model, check structural breaks (Chow Test) or interact with dummy time.
- The result of RAROA when using FGLS
FGLS estimation is used in the manuscript to analyze ROA and RAROA as dependent variables. While this approach is appropriate in addressing heteroskedasticity and autocorrelation, the study made concerns about the use of FGLS in RAROA modeling due to its distributional characteristics.
Table 2 (Line 328) demonstrates that the RAROA variable is highly skewed, with a standard deviation of 9.62 and a maximum value of 92.96. These values suggest a highly non-normal and heterogeneous distribution, potentially violating the assumptions underlying FGLS, particularly regarding the normality of residuals and homoskedasticity post-transformation.
Suggestion:
To prevent skewness, consider conducting a robustness check using Quantile Regression or apply a log-transformation to the RAROA variable. This test can be included in the main text or as an appendix.
- Results of HCExSIZE:
The individual effects of HCE and SIZE on bank performance are both positive and statistically significant (0.0054*, 0.0022*, respectively), yet the interaction term (HCE × SIZE) is not. This finding appears to contradict the theoretical expectation based on the Resource-Based View (RBV) and economies of scale, which suggest that larger banks should better leverage human capital.
And the author explained in line 403-419, as follows:
‘...although the results indicate that both size and human capital positively impact the performance of commercial banks. However, when examining the moderating role of bank size, the results show that the regression coefficient of the interaction variable between bank size and human capital efficiency is not statistically significant. [...] This can be explained by the fact that, in Vietnam, banks regardless of size consistently emphasize the development and role of their human resources teams. [...] Personnel management in some aspects does not necessarily depend on asset size but mainly relies on training policies, compensation levels, organizational culture, and the ability to retain talent.’
Suggestion:
Conduct a subgroup analysis (e.g., by dividing banks into size tertiles or using interaction dummies) to explore if the effect of HCE is significantly different depending on bank size.
à to check hypothesis H3 again.
4.1. Additionally, author based the framework on RBV and economies of scale theories (lines 128-130), which already suggest that size indirectly influences HCE. However, introducing an interaction term (HCE×Size) without considering potential multicollinearity or redundancy may not be justified.
Suggestion: Add to examine correlations between HCE, Size, and HCE×Size, and provide VIF statistics in Table 3. Alternatively, use a subgroup analysis (e.g., small vs. large banks) to test the moderating effect more directly.
- Contradiction between expected sign and actual result
- Although the CPI variable is expected to be negative (line 305), the FGLS result (line 360) shows a positive and statistically significant coefficient of CPI on ROA. Notably, the manuscript does not mention this results.
Suggestion: explain or discusses this inverse result.
Minor mistakes when typing:
- Line 214: ‘H2’ is repeated twice;
- Line 306: ‘symboy’ à symbol
Line 481: ‘enhance their creativity, their creativity and innovation creativity.’ (make confusion about the content that the author would like to explain).
Comments for author File: Comments.pdf
The English could be improved to more clearly express the research.
Author Response
please see the attachment
Author Response File: Author Response.pdf
Round 2
Reviewer 2 Report
Comments and Suggestions for AuthorsDear Author,
Thank you for your thoughtful and detailed revisions. I appreciate the considerable effort you have made in addressing the reviewers’ comments. Below are my remarks regarding the revised manuscript:
- Responsiveness to Reviewer Feedback
You have successfully addressed all the major concerns raised in the initial review. Notably:
- You acknowledged the limitations related to the measurement of bank size (e.g., total assets as a single proxy) and clarified this as a direction for future research.
- The methodology section (Section 3.2) has been clarified with more robust explanations of model specification and estimation techniques.
- Your revision effectively integrates reviewer suggestions regarding the use of ROA as the main performance metric, including citations to support its appropriateness in the Vietnamese context.
- The inclusion of expanded explanations for descriptive statistics (e.g., skewness, outliers) adds helpful interpretative depth.
- Strengthened Theoretical Foundation
The theoretical framing—particularly the connection between the Resource-Based View (RBV), economies of scale, and the moderating hypothesis—has been improved. The clarification of how Vietnamese banking practices may diverge from RBV expectations due to institutional and regulatory homogenization is well-reasoned.
- Interpretation of Non-significant Moderating Effect
You provided a clear contextual explanation for the non-significant interaction between human capital efficiency and bank size. This demonstrates an awareness of how local dynamics may influence theoretical expectations and enhances the contribution of your study to region-specific literature.
- Bayesian Estimation as Robustness Check
The application of Bayesian methods in the robustness section is a strength of the revised paper. You explained the posterior probabilities and credible intervals with clarity, reinforcing the robustness of the findings. This methodological addition is both appropriate and well-executed.
- Minor Language and Structural Issues
While the substantive content has improved, some minor language errors and typographical inconsistencies remain. For example:
- The phrase in the title should be “Does Size Matter?” (which you have already corrected).
- Occasional repetition or awkward phrasing (e.g., “enhance their creativity, their creativity and innovation creativity”) has been addressed, but a final round of copyediting is still recommended to ensure smooth academic prose throughout.
- Suggestions for Further Refinement
- Consider summarizing the policy implications more succinctly at the end of the conclusion section to enhance clarity for readers with practical interests.
- If feasible, briefly highlight the implications of your findings for small vs. large banks in the Vietnamese context—especially since the moderating effect of size was not observed.
Final Remark
Overall, the revised manuscript is significantly improved and now presents a compelling, well-supported contribution to the literature on human capital and bank performance in emerging markets. I support its publication in JRFM.