How does financial depth influence corporate performance? Evidence from logistics sector

Abstract

This paper focuses on analyzing the impact of financial depth on corporate performance. The study data is collected by the author from World Bank statistics and financial statements of companies in the logistics sector, which is a relatively young industry but has great potential for development in Vietnam. Using the Generalized Method of Moment (GMM) to estimate the study model, the author finds out a significant impact of financial depth on corporate performance. In particular, the financial depth from a banking perspective has a positive impact on corporate performance. However, the financial depth from a stock market perspective has not brought positive results to the corporate performance. Not only that, the author also finds out significant impacts of financial leverage and firm size control variables on corporate performance. Therefore, it can be said that the financial depth from the perspective of banks plays an important role in stimulating the corporate performance. Meanwhile, the financial depth from the perspective of the stock market has not shown this role, this is the difference between this study result and the previous studies. The results of this study are important for logistics managers and policymakers in Vietnam.