Bank reforms and efficiency in Vietnamese banks: Evidence based on SFA and DEA

Nguyen, Thanh Pham Thien, Nghiem, Son Hong, Roca, Eduardo, & Sharma, Parmendra (2016) Bank reforms and efficiency in Vietnamese banks: Evidence based on SFA and DEA. Applied Economics, 48(30), pp. 2822-2835.

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Abstract

This study examines the cost efficiency of Vietnamese banks from 2000 to 2014 in the first stage, and the selection and dynamic effects of two governance reforms, foreign partial acquisition and listing on the stock exchange, on the efficiency in the second stage. Empirical results from the two-stage Stochastic Frontier Analysis (SFA) are highly consistent with those from the two-stage Data Envelopment Analysis (DEA) . Specifically, the first-stage efficiency estimation indicates that the cost efficiency shows a slightly upward trend over the period 2000 – 2014, with the cost efficiency score being 0.93 and state-owned banks outperforming joint-stock banks (JSBs). The mixed process seemingly unrelated regression estimator which controls the potential endogeneity of public listing and foreign acquisition in the second stage shows that selection effects occur in the Vietnamese banking system: banks selected by the strategic foreign investors for partial acquisition and banks selected for public listing are more cost-efficient than those not selected. The short-term and long-term dynamic effects of foreign partial acquisition are documented: the cost efficiency of the Vietnamese banks post-partial acquisition is lower than prior-partial acquisition, and it experiences a decreasing trend since partial acquisition. However, the short-term and long-term dynamic effects of public listing are not evidenced: the cost efficiency of the banks after public listing is not statistically different from that before public listing, and it also reveals an unclear trend since public listing.

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ID Code: 96225
Item Type: Journal Article
Refereed: Yes
Keywords: Bank reforms, Efficiency, DEA, SFA
DOI: 10.1080/00036846.2015.1130788
ISSN: 1466-4283
Divisions: Current > QUT Faculties and Divisions > Faculty of Health
Current > Institutes > Institute of Health and Biomedical Innovation
Current > Schools > School of Public Health & Social Work
Copyright Owner: Copyright 2016 Taylor & Francis
Deposited On: 16 Jun 2016 23:44
Last Modified: 23 Jun 2016 05:39

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