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Profit Efficiency and Productivity of Vietnamese Banks: A New Index Approach

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  • Daehoon Nahm
  • Ha Vu

Abstract

In this paper, we measure and analyse profit efficiency and productivity of Vietnamese banks using a newly developed index approach which is based on the directional distance function. Our findings indicate that the average bank operates quite far below the frontier of the best-practice bank, mainly due to allocative inefficiency rather than technical inefficiency, and that Vietnamese banks experience modest productivity growth. The thrust of this growth is technological progress, and to some degree technical efficiency change, whereas scale efficiency change contributes adversely to productivity growth. We also investigate the effects of the capital-adequacy and deposit-taking regulations on profit efficiency, and find no significant influences.

Suggested Citation

  • Daehoon Nahm & Ha Vu, 2013. "Profit Efficiency and Productivity of Vietnamese Banks: A New Index Approach," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 3(1), pages 1-4.
    • Handle: RePEc:spt:apfiba:v:3:y:2013:i:1:f:3_1_4
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    Cited by:

    1. Nguyen, Thi Lam Anh, 2018. "Diversification and bank efficiency in six ASEAN countries," Global Finance Journal, Elsevier, vol. 37(C), pages 57-78.
    2. Stephanie McWhinnie & Kofi Otumawu-Apreku, 2013. "Profit Efficiency of the South Australian Rock Lobster Fishery: Nerlovian and Directional Distance Function Approach," School of Economics and Public Policy Working Papers 2013-13, University of Adelaide, School of Economics and Public Policy.
    3. Stephanie McWhinnie & Kofi Otumawu-Apreku, 2013. "Evaluating Profit Efficiency of the South Australian Rock Lobster Fishery: Nerlovian and Directional Distance Function Approach," School of Economics and Public Policy Working Papers 2013-18, University of Adelaide, School of Economics and Public Policy.
    4. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    5. , Aisdl, 2019. "Stock Market And Economic Growth In Vietnam," OSF Preprints ucbhp, Center for Open Science.
    6. Rolf Färe & Xinju He & Sungko Li & Valentin Zelenyuk, 2019. "A Unifying Framework for Farrell Profit Efficiency Measurement," Operations Research, INFORMS, vol. 67(1), pages 183-197, January.

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