Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.no7.439

Determinants of Retail Banking Efficiency: A Case of Vietcombank Branches in the Mekong-Delta Region  

LE, Thi Thu Diem (School of Economics and Law, Tra Vinh University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.7, 2020 , pp. 439-451 More about this Journal
Abstract
This study focused on researching the factors affecting retail banking efficiency of Vietcombank branches in the Mekong-Delta region. By collecting data from financial statements from 15 branches of VCB in the Mekong-Delta Region between 2015 and 2018, the paper applies DEA estimation to measure the effectiveness of retail banking activities and uses the Tobit regression model to identify factors affecting retail banking efficiency. The results demonstrate that the retail banking efficiency of branches averaged 52.5% during the period. The rating result shows the branches in An Giang, Can Tho, Dong Thap, Kien Giang, Long An, Phu Quoc and Tra Noc rank at the top technical efficiency. In group of medium efficiency, there are branches in Soc Trang, Tien Giang and Vinh Long. In the category of the poor efficiency are the branches in Bac Lieu, Ben Tre, Ca Mau, Chau Doc and Tra Vinh. The results also show that bank scale-related factors, capital adequacy, credit quality, time specific and region impact significantly the retail banking efficiency. The research not, only contributes to enriching the empirical research method but also is significant for the management activities in business developing strategies, improving the operational efficiency of Vietcombank in the region.
Keywords
Financial Institution; Retail Banking Efficiency; Bank Branches; Mekong-Delta Region;
Citations & Related Records
Times Cited By KSCI : 4  (Citation Analysis)
연도 인용수 순위
1 Andries, A. M. (2011). The Determinants of Bank Efficiency and Productivity Growth in the Central and Eastern European Banking Systems. Eastern European Economics, 49(6), 38-59. https://doi.org/10.2753/EEE0012-8775490603   DOI
2 Avkiran, N. K. (1999). An application reference for data envelopment analysis in branch banking: helping the novice researcher. International Journal of Bank Marketing, 17(5), 206-220. https://doi.org/10.1108/02652329910292675   DOI
3 Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis. Management Science, 30(9), 1078-1092. https://doi.org/10.1287/mnsc.30.9.1078   DOI
4 Deville, A. (2009). Branch banking network assessment using DEA: A benchmarking analysis-A note. Management Accounting Research, 20(4), 252-261. https://doi.org/10.1016/j.mar.2009.08.001   DOI
5 Girardone, C., Molyneux, P., & Gardener, E. P. M. (2004). Analysing the determinants of bank efficiency: the case of Italian banks. Applied Economic, 36(3), 215-227. https://doi.org/10.1080/0003684042000175334   DOI
6 GSO. (2018). Statistical Yearbook 2018. Ha Noi: General Statistics Office.
7 Hauner, D. (2005). Explaining efficiency differences among large German and Austrian banks. Applied Economics, 37(9), 969-980. https://doi.org/10.1080/00036840500081820   DOI
8 Hensel, N. D. (2003). Strategic Management of Cost Efficiencies in Networks: Cross-country Evidence on European Branch Banking. European Financial Management, 9(3), 333-360. https://doi.org/10.1111/1468-036X.00224   DOI
9 Kaparakis, E. I., Miller, S. M., & Noulas, A. G. (1994). Short-run cost inefficiency of commercial banks : a flexible stochastic frontier approach. Journal of Money, Credit and Banking, 26(4), 875-893. https://doi.org/10.2307/2077953   DOI
10 Kwan, S. H., & Eisenbeis, R. (1997). Bank Risk, Capitalization, and Operating Efficiency. Journal of Financial Services Research, 12(2/3), 117-131. https://doi.org/10.1023/A:1007970618648   DOI
11 Vietcombank. (2018). 2018 Annual Report: Breaking with the digital banking revolution. Retrieved from Ha Noi: https://portal.vietcombank.com.vn/Investors/Pages/chi-tiet-nha-dautu.aspx?ItemID=1087&devicechannel=default
12 LaPlante, A. E., & Paradi, J. (2015). Evaluation of bank branch growth potential using data envelopment analysis. Omega, 52, 33-41. https://doi.org/10.1016/j.omega.2014.10.009   DOI
13 Majeed, M. K., Jun, J. C., Zia-Ur-Rehman, M., Mohsin, M., & Rafiq, M. Z. (2020). The Board Size and Board Composition Impact on Financial Performance: An Evidence from the Pakistani and Chinese's Listed Banking Sector. Journal of Asian Finance, Economics and Business, 7(4), 81-95. https://doi.org/10.13106/jafeb.2020.vol7.no4.81   DOI
14 Banna, H., Ahmad, R., & Koh, E. H. Y. (2017). Determinants of Commercial Banks' Efficiency in Bangladesh: Does Crisis Matter? Journal of Asian Finance, Economics and Business, 4(3), 19-26. http://dx.doi.org/10.13106/jafeb.2017.vol4.no3.19   DOI
15 Barros, C. P., Ferreira, C., & Williams, J. (2007). Analysing the determinants of performance of best and worst European banks: A mixed logit approach. Journal of Banking & Finance, 31(7), 2189-2203. https://doi.org/10.1016/j.jbankfin.2006.11.010   DOI
16 Batir, T. E., Volkman, D. A., & Gungor, B. (2017). Determinants of bank efficiency in Turkey: Participation banks versus conventional banks. Borsa Istanbul Review, 17(2), 86-96. https://doi.org/10.1016/j.bir.2017.02.003   DOI
17 Stewart, C., Matousek, R., & Nguyen, T. N. (2016). Efficiency in the Vietnamese banking system: A DEA double bootstrap approach. Research in International Business and Finance, 36, 96-111. https://doi.org/10.1016/j.ribaf.2015.09.006   DOI
18 Vallascas, F., & Keasey, K. (2012). Bank resilience to systemic shocks and the stability of banking systems: Small is beautiful. Journal of International Money and Finance, 31(6), 1745-1776. https://doi.org/10.1016/j.jimonfin.2012.03.011   DOI
19 Berger, A. N. (1993). "Distribution-Free" Estimates of Efficiency in the U.S. Banking Industry and Tests of the Standard Distributional Assumptions. Journal of Productivity Analysis, 4(3), 261-292. https://doi.org/10.1007/BF01073413   DOI
20 Bauer, P. W., Berger, A. N., Ferrier, G. D., & Humphrey, D. B. (1998). Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods. Journal of Economics and Business, 50(2), 85-114. https://doi.org/10.1016/S0148-6195(97)00072-6   DOI
21 Berger, A. N., & Mester, L. J. (1997). Inside the black box: What explains differences in the efficiencies of financial institutions? Journal of Banking & Finance, 21(7), 895-947. https://doi.org/10.1016/s0378-4266(97)00010-1   DOI
22 Bhattacharyya, A., Lovell, C. A. K., & Sahay, P. (1997). The impact of liberalization on the productive efficiency of Indian commercial banks. European Journal of Operational Research, 98(2), 332-345. https://doi.org/10.1016/S0377-2217(96)00351-7   DOI
23 Boufounou, P. V. (1995). Evaluating bank branch location and performance: A case study. European Journal of Operational Research, 87(2), 389-402. https://doi.org/10.1016/0377-2217(92)00080-5   DOI
24 Ngan, T. H., Thao, T. P., & Huan, N. H. (2015). Impact of Restructuring on Efficiency of Vietnam's Commercial Banks. Journal of Economic Development, 22(2), 27-47. https://doi.org/10.24311/jed/2015.22.2.05
25 Mester, L. J. (1996). A study of bank efficiency taking into account risk-preferences. Journal of Banking & Finance, 20(6), 1025-1045. https://doi.org/10.1016/0378-4266(95)00047-X   DOI
26 Molyneux, P., & Thornton, J. (1992). Determinants of European bank profitability: A note. Journal of Banking & Finance, 16(6), 1173-1178. https://doi.org/10.1016/0378-4266(92)90065-8   DOI
27 Murphy, N. B., & Orgler, Y. E. (1982). Cost analysis for branching systems: Methodology, test results, and implications for management. Journal of Financial Research, 5(2), 181-188. https://doi.org/10.1111/j.1475-6803.1982.tb00059.x   DOI
28 Ngo, D. T. (2010). Evaluating the Efficiency of Vietnamese Banking System: An Application Using Data Envelopment Analysis. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1626009
29 Ngo, D. T. (2015). Efficiency of the banking system in Vietnam under financial liberalization. Manawatu, New Zealand: Doctoral dissertation, Massey University. Retrieved from http://hdl.handle.net/10179/7208
30 Nguyen, P. A., & Simioni, M. (2015). Productivity and efficiency of Vietnamese banking system: new evidence using Fare-Primont index analysis. Applied Economics, 47(41), 4395-4407. https://doi.org/10.1080/00036846.2015.1030565   DOI
31 Noulas, A. G., Glaveli, N., & Kiriakopoulos, L. (2008). Investigating cost efficiency in the branch network of a Greek bank: an empirical study. Managerial Finance, 34(3), 160-171. https://doi.org/10.1108/03074350810848045   DOI
32 Manlagnit, M. C. V. (2011). Cost efficiency, determinants, and risk preferences in banking: A case of stochastic frontier analysis in the Philippines. Journal of Asian Economics, 22(1), 23-35. https://doi.org/10.1016/j.asieco.2010.10.001   DOI
33 Casu, B., & Molyneux, P. (2003). A comparative study of efficiency in European banking. Applied Economics, 35(17), 1865-1876. https://doi.org/10.1080/0003684032000158109   DOI
34 Abdul-Majid, M., Saal, D. S., & Battisti, G. (2010). Efficiency in Islamic and conventional banking: An international comparison. Journal of Productivity Analysis, 34(1), 25-43. https://doi.org/10.1007/s11123-009-0165-3   DOI
35 Adusei, M. (2016). Determinants of bank technical efficiency: Evidence from rural and community banks in Ghana. Cogent Business & Management, 3(1), 0. https://doi.org/10.1080/23311975.2016.1199519
36 Camanho, A. S., & Dyson, R. G. (2005b). Cost efficiency, production and value-added models in the analysis of bank branch performance. Journal of the Operational Research Society, 56(5), 483-494. https://doi.org/10.1057/palgrave.jors.2601839   DOI
37 Coelli, T. J., Rao, D. S. P., O'Donnell, C. J., & Battese, G. E. (2005). An Introduction to Efficiency and Productivity Analysis (2 ed.). Boston, MA: Springer.
38 Cook, W. D., Hababou, M., & Tuenter, H. J. H. (2000). Multicomponent Efficiency Measurement and Shared Inputs in Data Envelopment Analysis: An Application to Sales and Service Performance in Bank Branches. Journal of Productivity Analysis, 14(3), 209-224. https://doi.org/10.1023/A:1026598803764   DOI
39 Dao, B. T. T., & Nguyen, D. P. (2020). Determinants of Profitability in Commercial Banks in Vietnam, Malaysia and Thailand. Journal of Asian Finance, Economics and Business, 7(4), 133-143. https://doi.org/10.13106/jafeb.2020.vol7.no4.133   DOI
40 Das, A., Ray, S. C., & Nag, A. (2009). Labor-use efficiency in Indian banking: A branch-level analysis. Omega, 37(2), 411-425. https://doi.org/10.1016/j.omega.2007.05.002   DOI
41 Sharma, D., Sharma, A. K., & Barua, M. K. (2013). Efficiency and productivity of banking sector: A critical analysis of literature and design of conceptual model. Qualitative Research in Financial Markets, 5(2), 195-224. https://doi.org/10.1108/QRFM-10-2011-0025   DOI
42 Camanho, A. S., & Dyson, R. G. (2005a). Cost efficiency measurement with price uncertainty: a DEA application to bank branch assessments. European Journal of Operational Research, 161(2), 432-446. https://doi.org/10.1016/j.ejor.2003.07.018   DOI
43 Othman, N., Abdul-Majid, M., & Rahman, A. A. (2017). Partnership financing and bank efficiency. Pacific-Basin Finance Journal, 46, 1-13. https://doi.org/10.1016/j.pacfin.2017.08.002   DOI
44 Paradi, J. C., & Zhu, H. (2013). A survey on bank branch efficiency and performance research with data envelopment analysis. Omega, 41(1), 61-79. https://doi.org/10.1016/j.omega.2011.08.010   DOI
45 Paradia, J. C., Rouatt, S., & Zhu, H. (2011). Two-stage evaluation of bank branch efficiency using data envelopment analysis. Omega, 39(1), 99-109. https://doi.org/10.1016/j.omega.2010.04.002   DOI
46 Quaranta, A. G., Raffoni, A., & Visani, F. (2018). A multidimensional approach to measuring bank branch efficiency. European Journal of Operational Research, 266(2), 746-760. https://doi.org/10.1016/j.ejor.2017.10.009   DOI
47 Sarmiento, M., & Galan, J. E. (2017). The influence of risk-taking on bank efficiency: Evidence from Colombia. Emerging Markets Review, 32, 52-73. https://doi.org/10.1016/j.ememar.2017.05.007   DOI
48 Schaffnit, C., Rosen, D., & Paradi, J. C. (1997). Best practice analysis of bank branches: An application of DEA in a large Canadian bank. European Journal of Operational Research, 98(2), 269-289. https://doi.org/10.1016/S0377-2217(96)00347-5   DOI
49 Sherman, H. D., & Gold, F. (1985). Bank branch operating efficiency: Evaluation with Data Envelopment Analysis. Journal of Banking & Finance, 9(2), 297-315. https://doi.org/10.1016/0378-4266(85)90025-1   DOI
50 Soteriou, A. C., Karahanna, E., Papanastasiou, C., & Diakourakis, M. S. (1998). Using DEA to evaluate the efficiency of secondary schools: the case of Cyprus. International Journal of Educational Management, 12(2), 65-73. https://doi.org/10.1108/09513549810204441   DOI