Technical Efficiency of Vietnamese Commercial Banks

Linh Trinh Doan Tuan

doi:doi:10.11648/j.ajtab.20200602.12

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Technical Efficiency of Vietnamese Commercial Banks

Linh Trinh Doan Tuan

Published in American Journal of Theoretical and Applied Business (Volume 6, Issue 2)

Received: 7 August 2020 Accepted: 22 August 2020 Published: 31 August 2020

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Abstract

The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.

Published in	American Journal of Theoretical and Applied Business (Volume 6, Issue 2)
DOI	10.11648/j.ajtab.20200602.12
Page(s)	17-22
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

SFA, Technical Efficiency, Commercial Bank

References

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[5]	D. V. Dung, The theory of competitive structure of industry with the enhancement of competitiveness of Vietnamese commercial banks today (National University of Economics, Viet Nam, 2015).
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[7]	M. Ismail, Study of efficiency and competitive behaviour of commercial banks in Malaysia (Cardiff Business School, University of Wales, Cardiff, 2005).
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[9]	K. Mlambo, M. Ncube, African Development Review 23 (1), 4 (2011).
[10]	E. Gardener, P. Molyneux, H. Nguyen-Linh, The Service Industries J. 31 (16), 2693 (2011).
[11]	R. Arrawatia, A. Misra, V. Dawar, Intern. J. of Law and Management 57 (3), 217 (2015).
[12]	W. P. Wong, Q. Deng, Benchmarking: An International Journal 23 (7), 1798 (2016).
[13]	N. Apergis, M. L. Polemis, Applied Economics 48, 5276 (2016).
[14]	S. G. Castellanos, G. A. Del Ángel, J. G. Garza-García, Competition and Efficiency in the Mexican Banking Industry - Theory and Empirical Avidence (Palgrave Macmilan, London, 2016)
[15]	M. Z. Abd. Karim, ASEAN Economic Bulletin 8 (3), 289 (2001).
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APA Style

Linh Trinh Doan Tuan. (2020). Technical Efficiency of Vietnamese Commercial Banks. American Journal of Theoretical and Applied Business, 6(2), 17-22. https://doi.org/10.11648/j.ajtab.20200602.12

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ACS Style

Linh Trinh Doan Tuan. Technical Efficiency of Vietnamese Commercial Banks. Am. J. Theor. Appl. Bus. 2020, 6(2), 17-22. doi: 10.11648/j.ajtab.20200602.12

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AMA Style

Linh Trinh Doan Tuan. Technical Efficiency of Vietnamese Commercial Banks. Am J Theor Appl Bus. 2020;6(2):17-22. doi: 10.11648/j.ajtab.20200602.12

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@article{10.11648/j.ajtab.20200602.12,
  author = {Linh Trinh Doan Tuan},
  title = {Technical Efficiency of Vietnamese Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {6},
  number = {2},
  pages = {17-22},
  doi = {10.11648/j.ajtab.20200602.12},
  url = {https://doi.org/10.11648/j.ajtab.20200602.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20200602.12},
  abstract = {The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.},
 year = {2020}
}

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TY  - JOUR
T1  - Technical Efficiency of Vietnamese Commercial Banks
AU  - Linh Trinh Doan Tuan
Y1  - 2020/08/31
PY  - 2020
N1  - https://doi.org/10.11648/j.ajtab.20200602.12
DO  - 10.11648/j.ajtab.20200602.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 17
EP  - 22
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20200602.12
AB  - The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.
VL  - 6
IS  - 2
ER  -

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Author Information

Linh Trinh Doan Tuan

University of Economisc anh Law, Viet Nam National University, Hochiminh City, Vietnam

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APA Style

Linh Trinh Doan Tuan. (2020). Technical Efficiency of Vietnamese Commercial Banks. American Journal of Theoretical and Applied Business, 6(2), 17-22. https://doi.org/10.11648/j.ajtab.20200602.12

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ACS Style

Linh Trinh Doan Tuan. Technical Efficiency of Vietnamese Commercial Banks. Am. J. Theor. Appl. Bus. 2020, 6(2), 17-22. doi: 10.11648/j.ajtab.20200602.12

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AMA Style

Linh Trinh Doan Tuan. Technical Efficiency of Vietnamese Commercial Banks. Am J Theor Appl Bus. 2020;6(2):17-22. doi: 10.11648/j.ajtab.20200602.12

Copy | Download

@article{10.11648/j.ajtab.20200602.12,
  author = {Linh Trinh Doan Tuan},
  title = {Technical Efficiency of Vietnamese Commercial Banks},
  journal = {American Journal of Theoretical and Applied Business},
  volume = {6},
  number = {2},
  pages = {17-22},
  doi = {10.11648/j.ajtab.20200602.12},
  url = {https://doi.org/10.11648/j.ajtab.20200602.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajtab.20200602.12},
  abstract = {The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Technical Efficiency of Vietnamese Commercial Banks
AU  - Linh Trinh Doan Tuan
Y1  - 2020/08/31
PY  - 2020
N1  - https://doi.org/10.11648/j.ajtab.20200602.12
DO  - 10.11648/j.ajtab.20200602.12
T2  - American Journal of Theoretical and Applied Business
JF  - American Journal of Theoretical and Applied Business
JO  - American Journal of Theoretical and Applied Business
SP  - 17
EP  - 22
PB  - Science Publishing Group
SN  - 2469-7842
UR  - https://doi.org/10.11648/j.ajtab.20200602.12
AB  - The objective of this study is to analyze the technical efficiency of commercial banks operating in Vietnam, with an analysis of 30 out of 44 existing commercial banks. The author uses a parametric method with a Stochastic Frontier Analysis (SFA) with independent variables including equity, customer deposits, loans and total operating costs, and the dependent variable is total operating income. The results show that the mean technical efficiency of Vietnamese commercial banks in the research period is 0.728, the lowest efficiency is 0.692, the highest efficiency is 0.761. The technical efficiency of Vietnamese commercial banks in this period is low, the reason for the low efficiency of Vietnamese banks is that during this period, the Vietnamese banking system has just gone through a difficult period 2008 - 2012 and the Government of Vietnam restructured the banking system and credit institutions. Among commercial banks that are operating in weak cases, they are forced to restructure by mergers, acquisitions... this affects the overall average efficiency of the entire Vietnamese commercial banking system. The research results also show that the group of foreign banks has the highest average technical efficiency, with an average efficiency of 0.85. The group of state-owned commercial banks with average efficiency ranked second, this group having an average technical efficiency of 0.76. The group of private banks with the lowest average efficiency, this group has an average efficiency of 0.71. Foreign banks in Vietnam are subsidiary banks owned by major banking groups in the world such as HSBC, Shinhanbank, Standard Chartered.... These banks have advantages in capital, experience, and energy. governance, banking technology advantages... should have the highest operational efficiency. State-owned banks have a longer history of development than private banks, have capital from the state and have incentives from the government... so they are more effective than private banks. in Viet Nam.
VL  - 6
IS  - 2
ER  -

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