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Does government financial support decrease the inefficiency of public universities? A decomposition approach

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  • Tran, Trung
  • Thanh, Hai Trinh
  • Van Le, Dao
  • Phuong, Thao Trinh Thi
  • Lan, Phuong Nguyen

Abstract

This study contributes to the literature by considering for the first time the link between government financial support and the efficiency of public universities in Vietnam. Using the Färe-Primont index decomposition approach, the study shows that the decline in the aggregate efficiency of the universities was driven by a decline in technical efficiency and in residual mix efficiency. Our analysis further reveals that while an input-based government funding system is found to decrease scale efficiency, an increase in the investment ratio for academic and research activities promotes the aggregate, allocative efficiency of public universities.

Suggested Citation

  • Tran, Trung & Thanh, Hai Trinh & Van Le, Dao & Phuong, Thao Trinh Thi & Lan, Phuong Nguyen, 2022. "Does government financial support decrease the inefficiency of public universities? A decomposition approach," Finance Research Letters, Elsevier, vol. 47(PA).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005821
    DOI: 10.1016/j.frl.2021.102651
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    References listed on IDEAS

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    3. Carolyn–Dung T. T. Tran & Renato A. Villano, 2017. "Input Rigidities and Performance of Vietnamese Universities," Asian Economic Journal, East Asian Economic Association, vol. 31(3), pages 253-273, September.
    4. Liu, Yunbo & Yin, Lu & Guo, Jianru, 2021. "The quality of higher education and overeducation: Where should higher education funding go?," Finance Research Letters, Elsevier, vol. 41(C).
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    More about this item

    Keywords

    Input-based funding; Färe-Primont index; Government financial spending; Vietnam;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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