tailieunhanh - Impact of restructuring on efficiency of Vietnam’s commercial banks

The paper presents research on restructuring of Vietnam’s system of commercial banks by implementing a three-stage DEA/SFA approach to estimate of impact of the restructuring process on banking efficiency. | Tran Hoang Ngan et al. / Journal of Economic Development 22 (2) 27-47 27 Impact of Restructuring on Efficiency of Vietnam’s Commercial Banks TRAN HOANG NGAN University of Economics HCMC - ngannh@ TRAN PHUONG THAO University of Economics HCMC - tranthao@ NGUYEN HUU HUAN University of Economics HCMC - huannguyen@ ARTICLE INFO ABSTRACT Article history: The paper presents research on restructuring of Vietnam’s system of commercial banks by implementing a three-stage DEA/SFA approach to estimate of impact of the restructuring process on banking efficiency. The empirical findings show that rises and falls in banking efficiency are irregular because the restructuring process has not completed and that some banks gain higher efficiency scores while others, especially those affected by low performance of merged banks, witness sharp falls. Received: Aug. 27 2014 Received in revised form: Dec. 17 2014 Accepted: Mar. 26 2015 Keywords: restructuring, efficiency, commercial banks, Data Envelopment Analysis, Stochastic Frontier Analysis. 28 Tran Hoang Ngan et al. / Journal of Economic Development 22 (2) 27-47 1. Introduction The system of commercial banks plays an extremely important role in smoothing flows of capital, thereby promoting the socioeconomic development. After its 60 years of development, the Vietnam’s system of commercial banks, comprising five stateowned banks, 33 joint stocks, four joint ventures, five foreign-owned banks, and 51 branches of foreign ones, has gradually improved its structure, size, and organization in spite of the current difficulties and limitations. Severely impacted by the global economic recession, since 2008 Vietnam’s commercial banks have faced various risks and challenges that could be seen in falling indicators of banking efficiency such as profitability, credit growth rate, and bad debt. Several measures, such as privatization, acquisitions and mergers, increased supply of liquidity to banks in .