Digital Transformation and Risk-Taking in Vietnamese Banks: A Principal-Agent Perspective

Thi Thanh Dieu Tran; Tien Dung Nguyen; Huu Truc Nguyen

doi:10.17323/j.jcfr.2073-0438.19.4.2025.50-66

Thi Thanh Dieu Tran Quy Nhon University, Gialai, Vietnam https://orcid.org/0000-0002-8977-7312
Tien Dung Nguyen Quy Nhon University, Gialai, Vietnam https://orcid.org/0000-0001-6835-1251
Huu Truc Nguyen Quy Nhon University, Gialai, Vietnam https://orcid.org/0000-0001-5610-072X

DOI: https://doi.org/10.17323/j.jcfr.2073-0438.19.4.2025.50-66

Keywords: agency theory, digital transformation, emerging economies, principal-agent conflict, risk-taking, Vietnam

Abstract

This study applies the principal-agent framework to examine the impact of digital transformation on banks’ risk-taking behavior in Vietnam in 2012–2022. It further expands the analysis by investigating the moderating roles of bank-specific characteristics and external shocks in this relationship. The results reveal a nonlinear, U-shaped relationship: in the early stages of digital transformation, heightened information asymmetry intensifies principal-agent conflicts, thereby reducing risk-taking. As digital maturity increases, moral hazard becomes more prominent, encouraging greater risk-taking as agents respond to performance-based incentives. Furthermore, larger banks tend to exhibit more conservative behavior due to their complex organizational structures and divergent risk perceptions, while the COVID-19 pandemic coupled with rapid technological change has amplified risk aversion across the sector. These findings offer important implications
for corporate financial decision-making and regulatory policy, emphasizing the need to manage agency conflicts and align digital strategies with optimal risk-taking behavior in the evolving digital finance landscape.

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