The Role of Governance and Digital Transformation in Enhancing Operational Sustainability of Non-Banking Financial Institutions | [Pakistan Journal of Life and Social Sciences • 2025]

Author(s):

1. Thi Thuy Huong Nguyen: Faculty of Foreign Languages, Academy of Finance, Hai Duong

2. Huy Duong Phan: Thanh Dong University, Hai Duong

Abstract:

This paper investigates the determinants of operational sustainability in NonBanking Financial Institutions (NBFIs), with a specific focus on governance, digital transformation, business model diversification, cost management, and macroeconomic factors. Using regression analysis, the study identifies the significant role of governance and digital transformation in driving sustainability, highlighting their strong positive influence on operational efficiency. These findings underscore the importance of adopting robust governance frameworks and embracing technological advancements in response to the evolving financial landscape. The research further examines the impact of business model diversification, which shows a moderate but positive effect on sustainability. This suggests that expanding service offerings can enhance the income-generating potential of NBFIs, provided such strategies are carefully managed. However, cost management revealed a minimal impact on sustainability, challenging traditional assumptions that financial efficiency is a key determinant of success in the sector. Overall, the paper contributes to the existing literature by validating the importance of governance and digital transformation while providing new insights into the dynamic relationship between business strategies and operational sustainability in NBFIs. The findings highlight the necessity for these institutions to adapt their management practices to align with technological and market changes for long-term viability.

Page(s): 1118-1130

DOI: 10.57239/PJLSS-2025-23.1.0087

Published: Journal: Pakistan Journal of Life and Social Sciences, Volume: 23, Issue: 1, Year: 2025

Keywords:

Sustainability , Vietnam , Operational processes , Nonbank financial institutions

References:

[1] Anh N. T. N. .2017 .Sustainable development of the People's Credit Fund system in Vietnam [Master's thesis]. , : .

[2] Beck T.,Demirgüç-Kunt A.,Levine R. .2015 .Financial institutions and markets across countries and over time: The updated financial development and structure database. World Bank Economic Review, 29(3) : 462-498.

[3] Beck T.,Demirgüç-Kunt A.,Martínez Pería M. S. .2015 .Banking SMEs around the world: Lending practices, business models, drivers and obstacles. Journal of Banking & Finance, 04 : 5-14.

[4] Berger A. N.,Hasan I.,Zhou M. .2019 .The effects of financial safety on the performance of financial institutions: Evidence from emerging markets. Journal of Financial Stability, 48 : .

[5] Chou C. Y.,Chiu C. L. .2020 .The impact of FinTech adoption on financial institutions: Evidence from Taiwan. Journal of Financial Services Marketing, 25(2) : 60-75.

[6] De Young R. .2019 .The role of financial safety in the sustainability of financial institutions. Journal of Banking and Finance, 11 : 105-118.

[7] Hadziahmetovic M. .2020 .Determinants of operational self-sufficiency in microfinance institutions. Journal of Banking & Finance, 113 : 158-170.

[8] Jenkins D.,Smith A. .2020 .Financial safety and sustainability of non-bank credit institutions in emerging markets. Emerging Markets Review, 49 : 89-101.

[9] Johnson G.,Smith A. .2021 .Standardization of operational processes and product policies in non-bank financial institutions. Journal of Financial Services Research, 50(3) : 229-244.

[10] Kauffman R. J.,Lee J.,McFadden S. .2018 .Financial technology and the transformation of financial services. Information Systems Research, 30(1) : 12-29.

[11] Kumar A.,Rana N. P.,Dwivedi Y. K. .2021 .Analyzing the role of experience design in enhancing customer engagement and loyalty: Evidence from service industry. International Journal of Production Economics, 245 : .

[12] Lee D.,Lee Y.,Yang C. .2021 .The role of FinTech in transforming non-bank financial institutions. Journal of Financial Innovation, 7(1) : 45-56.

[13] Liu J. .2018 .Sustainability of microfinance institutions: Cross-country evidence. Journal of Development Studies, 55(4) : 691-709.

[14] Thi Ngoc Anh. Nguyen .2017 .Balancing growth and risk management in Vietnam's non-bank financial sector. Journal of Financial Management, 05(2) : 234-248.

[15] Nguyen T. H.,Tran V. Q. .2021 .Enhancing risk management in Vietnam's non-bank financial institutions. Journal of Asian Business and Economic Studies, 27(2) : 171-189.

[16] Nguyen T. T. N.,Tran T. T. .2021 .Risk management and regulatory compliance in Vietnam's non-bank financial institutions. Vietnam Finance Journal, 36(4) : 104-118.

[17] Scherer L. .2018 .The role of regulatory frameworks and standardized processes in non-bank financial institution sustainability. Journal of Risk Management, 11(1) : 55-72.

[18] .2019 .Law on credit institutions. National Political Publishing House., : .

[19] .2019 .Regulations on non-bank financial institutions in Vietnam. State Bank of Vietnam, : .

[20] Thakor A. V. .2019 .Fintech and banking: What do we know?. Journal of Financial Intermediation, 41 : .

[21] Thakor A. V. .2019 .Fintech and the future of financial services. Journal of Financial Economics, 05(1) : 139-158.

[22] Vietnam Finance Report. .2022 .Trends in consumer lending by financial companies in Vietnam. Vietnam Ministry of Finance., : .

[23] Wang X.,Li Z.,Zhang Y. .2023 .Connectivity and innovation: The mediating role of digitalization in business performance. Journal of Business Research, 03 : 285-294.

[24] Zhao X.,Wu Y.,Zhang H. .2019 .The impact of operational process standardization on the competitiveness and sustainability of non-bank financial institutions. Journal of Banking and Finance, 112 : 36-48.

Citations

Downloads

Views