Financial liberalisation, bank ownership type and performance in a transition economy: The case of Vietnam

Le, Phuong; Harvie, Charles; Arjomandi, Amir; Borthwick, James

doi:10.1016/j.pacfin.2019.101182

Cited by 23 publications

(19 citation statements)

References 58 publications

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“…The results show that except the year 2013, all SOCBs are the bestpractice banks when locating on the production frontier with the technical efficiency score equal to unity. These banks exert an outperformance in comparison with other bank groups including JSBs and FJVBs due to the larger size and advantages of privatisation which took place during 2006-2010 (Batten and Vo, 2019;Le, Harvie, Arjomandi, and Borthwick, 2019). Regarding ROSE, this is obvious that the value of scale efficiency decreases from 2012 and public banks are the most affected group when their value of scale efficiency declined to 0.1570 in 2018 from 0.6805 in 2011.…”

Section: Resultsmentioning

confidence: 96%

“…Following Das and Ghosh (2006), Hsiao, Chang, Cianci, and Huang (2010) and Le, Harvie, Arjomandi, and Borthwick (2019), the inputs of operating approach include interest and non-interest expenses while the outputs are interest and noninterest revenues. Interest expenses include expenses for deposits and other borrowed money while non-interest expenses are the sum of service charges, salaries and other expenses.…”

Section: Datamentioning

confidence: 99%

“…Of which, there are 20 private banks (commonly called the joint stock banks, JSBs), four state-owned commercial banks (SOCBs) and four foreign/joint-venture banks (FJVBs). The big-four SOCBs contribute to 48% of the total banks' assets while only a minority of 10% belongs to the FJVBs (Le, Harvie, Arjomandi, and Borthwick, 2019). Table 1 describes input/output variables used in this study.…”

Section: Datamentioning

confidence: 99%

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An Analysis of Vietnamese Bank Productivity Change in the Time of Restructuring

To¹,

Le²

2020

JAFEB

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Commercial banks play an important role as the main source of funding in the transition process of Vietnam as a market economy. As a result, enhancing the efficiency and productivity of Vietnamese banks can decrease the lending cost for individuals and enterprises. This study is to measure and analyze the productivity change of Vietnamese banking system in different ownership cohorts and sources of this change during the period of restructuring (2011-2019). The Hicks-Moorsteen total factor productivity index is utilised to measure the productivity change and to identify the sources of this change. For an empirical analysis, the data of 28 Vietnamese commercial banks from 2011 to 2018 is collected from their financial statements including balance sheets and income statements. The results show an increase of Vietnamese bank productivity due to the technological progress. While foreign and joint-venture banks are the most advanced cohort, stateowned banks have the lowest rate of productivity growth. The restructuring program negatively impacts scale efficiency and this measure attributes to a decline in the overall efficiency of the banks. We also found that state-owned commercial banks are the most efficient group in the sense that they can achieve the maximal level of revenue from a given amount of expense.

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Section: Resultsmentioning

confidence: 96%

Section: Datamentioning

confidence: 99%

Section: Datamentioning

confidence: 99%

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An Analysis of Vietnamese Bank Productivity Change in the Time of Restructuring

To¹,

Le²

2020

JAFEB

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“…The natural logarithm of total assets is a popular proxy for Bank size (LogSIZE). Prior studies report a negative relationship between bank size and bank risk (Lassoued et al, 2016;Le et al, 2019;Ghosh, 2015). On the contrary, larger banks have higher risks due to increased costs with scale (Vuong and Nguyen, 2020).…”

Section: Other Determinants Of Bank Risk-taking Behaviorsmentioning

confidence: 99%

Do Political Connections and Bank Funding Diversity Increase Non-Performing Loans: New Evidence from the Bayesian Approach

Duong¹

2022

MNJE

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Our study aims to fill the gap in estimating the impacts of political connections and bank funding diversity on the risk-taking behaviors of Vietnamese commercial banks. By employing the Bayesian methodology, our paper can overcome the small sample issues to reduce the bias in estimation results. We construct a data sample that includes 38 commercial banks in Vietnam from 2003 to 2020. Our results suggest several findings in the Vietnamese banking sector. Firstly, our findings suggest that politically connected banks have 0.4% non-performing loans higher than unconnected peers. Secondly, we find a positive relationship between funding diversity and non-performing loans of commercial banks in Vietnam. Interestingly, our findings report that the commercial banks, especially the politically connected banks, reduced non-performing loans by 0.2% and 0.4% for a year before the recent two National Congress of the Communist Party of Vietnam, respectively. It could be due to the notion that the bank managers secure their job and political promotions by reducing non-performing loans before the National Congress of the Communist Party of Vietnam. Finally, our study argues that the commercial bank had a lower level of non-performing loans during the Covid19 pandemic because the government offered stimulus supports to the local economy. Our study has substantial implications for bank managers and authorities in emerging markets.

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“…First, underdeveloped conditions and frictions in the financial markets in Vietnam may induce significant informal costs for small businesses wishing to gain access to bank loans. For example, Le et al (2019) investigating a set of Vietnamese state-owned banks, conclude that the banking reforms adopted in Vietnam are discriminatory in that they operate against domestic private and foreign-owned banks. The resulting distortions and inefficiencies in the banking sector have the potential to adversely impact on the borrowing incentives of local small businesses.…”

Section: External Finance and Firm Investment 221 Bank Loansmentioning

confidence: 99%

The relative importance of regional institutions and external finance for small business investment: evidence from Vietnam

Nguyen

2020

Journal of Institutional Economics

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This study examines the relative importance of local institutions and external finance on small business investment. Utilising the institutional theory, we argue that local institutions and external finance have heterogeneous effects on firm investment. More importantly, they may interact and moderate each other. Analysing a set of 1.3 million observations of small businesses operating in Vietnam (2006–2016) obtained from the Annual Enterprise Survey data from the Vietnam Statistics Office, we find that local institutional settings and external finance are important determinants of firm investment. Moreover, local institutions are able to moderate the effects of external finance on firm investment. As such, this study asserts that conventional models cannot discern whether institutions or external finance are more important to firm investment. Rather, the relative importance of institutions and external finance should be investigated from the perspective of their interaction.

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Financial liberalisation, bank ownership type and performance in a transition economy: The case of Vietnam

Cited by 23 publications

References 58 publications

An Analysis of Vietnamese Bank Productivity Change in the Time of Restructuring

An Analysis of Vietnamese Bank Productivity Change in the Time of Restructuring

Do Political Connections and Bank Funding Diversity Increase Non-Performing Loans: New Evidence from the Bayesian Approach

The relative importance of regional institutions and external finance for small business investment: evidence from Vietnam

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