Income Diversification and Bank Efficiency in Vietnam

Sang, Nguyen Minh

doi:10.31219/osf.io/9x2yz

Cited by 3 publications

(6 citation statements)

References 29 publications

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“…Still in this direction, diversification has proved to be a strategic practice within the scope of cooperative institutions. The more diversified, the better the efficiency scores tend to be, that is, an increase in diversification also represents an increase in cooperative efficiency, corroborating the findings of Sathye (2005) and Sang (2017), which also obtained a positive relationship between diversification and technical efficiency.…”

Section: Analysis and Discussion Of Resultssupporting

confidence: 80%

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Credit risk and technical efficiency in Brazilian credit unions

et al. 2020

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Resumo Este estudo analisa a relação entre o risco de crédito e a eficiência das cooperativas de crédito brasileiras no período de 2008 a 2017. Utilizou-se o modelo de Data Envelopment Analysis em dois estágios para a obtenção dos escores de eficiência, com a análise de um modelo Tobit no segundo estágio. Foram consultados especialistas para a construção e a validação dos escores de eficiência, o que é uma contribuição desse estudo em relação aos demais. Constatou-se que, quanto maior o risco de crédito, menores os escores de eficiência. De igual modo, viu-se que as cooperativas de crédito que conseguem manter sua continuidade no mercado e diversificam seus produtos tiveram maiores escores de eficiência e, por consequência, geraram mais benefícios aos associados. Adicionalmente, as cooperativas devem se atentar no número de pontos de atendimentos e em períodos de recessão econômica. O aumento do número de pontos de atendimento reduz os escores de eficiência. Considerando o período de retração econômica brasileira medido no período de 2015 a 2017, verificou-se um impacto negativo nos escores de eficiência médios das cooperativas. Como limitação, os resultados são decorrentes de inputs e outputs selecionados de informações contábeis e financeiras, de modo que se sugere que novas variáveis relacionadas à dimensão social das cooperativas sejam incorporadas em outros estudos a fim de avaliar a eficiência global das cooperativas de crédito brasileiras.

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Section: Analysis and Discussion Of Resultssupporting

confidence: 80%

“…For Sang (2017), the relationship between bank efficiency diversification remains inconclusive. For Krakah and Ameyaw (2010), the services provided by financial institutions outside their traditional activities favor the performance of these institutions.…”

Section: Diversification (Div)mentioning

confidence: 99%

Credit risk and technical efficiency in Brazilian credit unions

et al. 2020

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“…In line with the findings of Sufian ( 2009), Elyasiani and Wang (2012), Alhassan (2015) and Minh Sang (2017), positive and significant impact of bank intermediation function (measured by total loans and advances to total assets) on all computed efficiency parameters at 5 per cent significance level reveals effective use of assets for higher amount of credit creation.…”

Section: Efficiency Analysissupporting

confidence: 84%

“…They found that increased diversification improved bank efficiency but diversification benefits were offset by the increased exposure to volatile non-interest activities. A Vietnamese study by Minh Sang (2017) found that income diversification has positive impact on technical efficiency of 34 banks over the period 2007-2015. Using a sample of listed Chinese banks, Liang et al (2018) reported that income diversification improved accounting performance but decreased operating efficiency and market valuation because of diversification-induced agency cost.…”

Section: Empirical Literaturementioning

confidence: 99%

Dynamics of income diversification and bank performance in India

Vidyarthi

2019

JFEP

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Purpose The purpose of this paper is to examine the dynamics between income diversification and performance (cost, profit, revenue, technical, pure technical and scale efficiency) for 38 listed Indian banks within panel data framework during the period 2004-2005 to 2015-16. Design/methodology/approach This study computes bank’s cost, profit, revenue, technical, pure technical and scale efficiency within intermediation approach with data envelopment analysis (DEA) as a performance indicator, followed by exploring the association between income diversification and bank performance using truncated Tobit regression within panel data framework. Findings Tobit regression results revealed inverted U-shaped relationship between the income diversification and estimated efficiency parameters for the overall panel. Size and bank intermediation ratio seems to be a major factor in exploiting the potential benefits of income diversification. The author reconfirmed the inverted U-shaped relationship with these efficiency parameters for exclusive subsamples consisting of government-owned and private sector banks. Research limitations/implications Inverted U-shaped relationship between the income diversification and estimated efficiency parameters suggest that banks should go for limited diversification to improve performance. Thus, regulators and banks should pursue limited diversification strategy for improving banking efficiency. Originality/value This study computes bank performance (cost, profit, revenue, technical, pure technical and scale efficiency) based on DEA followed by exploring the association between performance and income diversification for 38 Bombay stock exchange listed banks.

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“…As listed banks gain more access to external finance source and customer base, their chance for the development of new banking services increase and thus, income diversification should also be higher. Some studies (Berger et al , 2010; Sang, 2017; Luu et al , 2019) found that income diversification of banks is positively associated with a bank’s performance. Therefore, income diversification could also be another channel for better performance of listed Vietnamese commercial banks.…”

Section: Results and Analysismentioning

confidence: 99%

To list or not to list, that is the question: new evidence from the performance of Vietnamese commercial banks

Le¹,

Duong²,

Nguyen³

2020

JFRC

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Purpose This paper aims to investigate the decisions of listing for Vietnamese banks and the impact of listing on bank performance. Design/methodology/approach A longitudinal data set of 30 commercial banks in the period of 2006–2018 with various univariate and multivariate tests is used. Findings This study found that listing is positively associated with bank profitability. The results are consistent even after the control for potential endogeneity problems by propensity score matching methodology and Heckman selection bias models. Further analysis suggests some new alternative channels for the positive impact, namely, the increased quality of information disclosure, technological development and income diversification of commercial banks after listing. Practical implications Hence, this paper provides recommendations and policy implications for regulatory bodies regarding the listing of commercial banks in Vietnam. Originality/value The contributions to the literature are three-folds. First, this study contributes to a strand of literature on the impact of going public [initial public offering (IPO)/listing] of financial institutions on their performance. While the literature on non-financial firm performance post-going public is ample, few have directly considered the IPO/listing of banks and other financial institutions. Second, in further looking at the impact of listing on bank performance, this study also sheds some light on the new possible channels of the effect and provides evidence of new channels. Then, last but not least, the case of Vietnam could possibly yield interesting results for a transitory stock market. From the evidence, the recommendations and policy implications for a listing of Vietnamese banks are provided.

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Income Diversification and Bank Efficiency in Vietnam

Abstract: Income Diversification and Bank Efficiency in Vietnam

Cited by 3 publications

References 29 publications

Credit risk and technical efficiency in Brazilian credit unions

Credit risk and technical efficiency in Brazilian credit unions

Dynamics of income diversification and bank performance in India

To list or not to list, that is the question: new evidence from the performance of Vietnamese commercial banks

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