Restructuring the Banking System: the Case of Vietnam
Abstract
This paper aims at studying the restructuring of commercial banks that has been started since 2008 in Vietnam by analysing in two angles: Efficiency and Stability of the banking system. Firstly, the paper applies a modified Data Envelopment Analysis (DEA) model in 2 cases to estimate the changes of the efficiency by analyse the E-scores of 26 commercial banks from 2008 to 2012 and examine the profits and productions efficiency of 7 DMUs of the Vietnamese banking system in 2 years 2011 and 2013. Secondly, this study will calculate the Z-scores and T-test by using SPSS program to assess the stability of the banking system. Moreover, this study uses quantitative and qualitative methods to assess and quantify the results of the Vietnam commercial banks’ restructuring under the Decision No. 254/QD-TTg. The results showed that Vietnamese banking system remained stable during the process and contributed to economic growth, however the results were quite limited and lacks of long-term effects, such as many restructuring objectives were not achieved thorough handling bad debt, cross-ownership, improving governance and enhance the operational efficiency of commercial banks. In particular, the major cause of these problems is due to the lack of a general approach to the overall handling of the issue of restructuring commercial banking system, particularly is missing a legal framework for the systematic implementation of the restructuring process in the context of economic restructure.
References
1. Ariff M. and Can, L. (2008). Cost and profit efficiency of Chinese banks: A non-parametric analysis. China Economic Review, vol. 19 (2), pp. 260-273.
2. Avkian N.K. (2011). Association of DEA supper - Efficiency estimates with financial ratio: Investigating the case for Chinese banking. Omega (0030-2228), vol. 39, pp. 323-334.
3. Berger A.N., Hancock D. and Humphrey D.B. (1987). Bank efficiency derived from the profit function. Journal of Banking and Finance, vol. 17, pp. 317-347.
4. Bernet B. and Walter S. (2009). Design, structure and implementation of a modern deposit insurance scheme. SUERF Studies 2009/5, SUERF - The European Money and finance forum.
5. Blazy R., Martel J. and Nigam, N. (2014). The choice between informal and formal restructuring: The case of French banks facing distressed SMEs. Journal of Banking & Finance, vol. 44, pp. 248-263.
6. Cao T.Y. N. (2007). Co cau lai cac NHTMNN Viet Nam trong giai doan hien nay [online]. Guildford: Vietnam documentary. Available at: https://vietnamdocumentary.wordpress.com/2015/08/31/luan-an-tien-si-kinhte-hoc-co-cau-lai-cac-ngan-hang-thuong-mai-nha-nuoc-viet-nam-trong-giai-doan-hien-nay (Accessed 8 September 2015).
7. Charnes A., Cooper W. and Rhodes E. (1979). Measuring the efficiency of decision-making units, Amsterdam: North-Holland publishing Company.
8. Chen-guo D., Ting L. and Jie W. (2007). Efficiency analysis of China’s commercial banks based on DEA: negative output investigation. China-USA Business Review, vol. 6 (2), pp. 50-56.
9. Chen K. and Pan, C. (2012). An Empirical Study of Credit Risk Efficiency of Banking Industry in Taiwan. Web Journal of Chinese Management Review. Vol. 15 (1), pp. 1-16.
10. Chen, Yu-Chuan, Yung-Ho Chiu, and Chin-Wei Huang. (2010). Measuring super-efficiency of financial and nonfinancial holding companies in Taiwan: An application of DEA models. Afr. J. Bus. Manage, vol. 4 (13), pp. 3122-3133.
11. Claessens S. (1999). Experiences of Resolution of Banking Crises. Strengthening the Banking System in China: A Joint BIS/PBC Conference held in Beijing, China. BIS Policy Paper 7, pp. 275-297.
12. Claessens S., Djankov S. and Klingebiel D. (1999). Financial Restructuring in East Asia: Halfway There? SSRN Electronic Journal.
13. Damar H.E. (2007). Does Post-Crisis Restructuring Decrease the Availability of Banking Services? The case of Turkey. Journal of Banking & Finance, vol. 31 (9), pp. 2886-2905.
14. Dickle P. (1999). Strengthening East Asia Financial System: An Integrated Approach. Asia Studies Institute Working Paper 10. Victoria University of Wellington. New Zealand.
15. Dziobek C. (1998). Market-Based Policy Instruments for Systemic Bank Restructuring [online]. Guildford: Social Science Research Network. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=882646. [Accessed 8 September 2015].
16. Dziobek C., and Pazarbasioglu C. (1997). Lesons from systemic bank restructuring: A survey of 24 countries. IMF Working paper WP/97/161.
17. Eken M.H. and Kale S. (2010). Measuring Bank Branch Performance Using Data Envelopment Analysis (DEA): The Case of Turkish Bank Branches. African Journal of Business Management, vol. 5 (3), pp. 889-901.
18. Filho B., Sa-Caputo D.D. C. D., Marin P.J. and Chang S. (2014). The Mechanism of Auriculotherapy: A Case Report Based On The Fractal Structure Of Meridian System. African Journal of Traditional, Complementary and Alternative Medicines, vol. 11 (3), p. 30.
19. Fu M. and Heffernan S. (2005). Cost X-efficiency in China’s banking sector. China Economic Review, vol. 18 (1), pp. 35-53.
20. Fukuyama H. (1993). Technical and scale efficiency of Japanese commercial banks: A non-parametric approach. Applied Economics, vol. 25, pp. 1101-1012.
21. Goodhart C. (1999). Recent developments in Central Banking. London: LSE Financial Markets Group.
22. Goto K., Tanaka K., Ishii N., Uchida S. and Takamatsu K. (2011). A single versus multiple bouts of moderate-intensity exercise for fat metabolism. Clinical Physiology and Functional Imaging, vol. 31 (3), pp. 215-220.
23. Hawkins J. and Turner P. (1999). Bank Restructuring in Practice: An Overview. Bank Restructuring in Practice. BIS Policy Paper, vol. 6 (Basel: Bank for International Settlements).
24. Hawkins J. and Turner P. (2000). Intentional financial reform: regulatory and other issues. International Financial Contagion: how it spreads and how it can be stopped. Washington, DC: ADB, IMF, MIT, WIDER and the World Bank, pp. 1-31.
25. Hsiao H.C., Hsihui C., Cianci A. M and Huang, L. H. (2010). First financial restructuring and operating efficiency: Evidence from Taiwanese commercial banks. Journal of Banking and Finance, vol. 34 (7), pp. 1461-1471. Available at: http://www1.worldbank.org/finance/assets/images/experience.pdf (Accessed 8 September 2015).
26. Hu J.L., Chen C.P., and Su Y. Y (2006). Ownership Reform and Efficiency of National-wide Banks in China. Available at: http://www.karyiuwong.com/confer/beijing06/papers/hu-chen-su.pdf (Accessed 11 September 2015).
27. IMF, (1998). IMF World Economic Outlook (WEO). Financial Crises: Causes and Indicators, May 1998. Contents. Available at: http://www.imf.org/external/pubs/ft/weo/weo0598 (Accessed 8 September 2015).
28. Kahn C. and Santos J. (2005). Allocating bank regulatory powers: Lender of last resort, deposit insurance and supervision. European Economic Review, vol. 49 (8), pp. 2107-2136.
29. Kang D. (2007). China rising: Peace, Power, and Order in East Asia. New York: Columbia University Press.
30. Khambata D. (1986). The practice of multinational banking. New York: Quorum Books.
31. Kim D. (1999). Bank Restructuring in Korea. Bank Restructuring in Practice. Policy Paper 6 (Basel: Bank for International Settlements).
32. Kushmeider R.M. and Blair C.E. (2007). FDIC: A Guide to Processing Deposit Insurance Claims: A Cross- Country Perspective. Article in journal Aufsatz in Zeitschriften. vol. 4 (2), pp. 42-50.
33. Landier A. and Ueda K. (2009). The Economics of Bank Restructuring: Understanding the Options. SSRN Electronic Journal.
34. Le T.T. N. and Chu K.L. (2012). Khung chinh sach tien te cua Viet Nam nam 2012 va nhung goi y chinh sach nam 2014. Available at: http://tapchi.hvnh.edu.vn/5744/news-detail/737704/so-128-129/khung-chinh-sachtien-te-cua-viet-nam-nam-2012-va-nhung-goi-y-chinh-sach.html (Accessed 8 September 2015).
35. Liu W., Zhang D., Li Q. and Li X. (2007). DEA Analysis Based on both Efficient and Anti-Efficient Frontiers. Kent Academic Repository. Available at: https://kar.kent.ac.uk/8500 (Accessed 8 Sep. 2015).
36. Miller S.M. and Noulas A.G. (1996). The technical efficiency of large bank production. Journal of Banking and Finance, vol. 20 (3), pp. 495-509.
37. Minh N., Khanh P., Minh N. and Anh N. (2012). A New Approach for Ranking Efficient Units in Data Envelopment Analysis and Application to a Sample of Vietnamese Agricultural Bank Branches. American Journal of Operations Research, vol. 2 (1), pp. 126-136.
38. Minh N., Long G. and Hung N. (2013). Efficiency and super-efficiency of commercial banks in Vietnam: Performances and Determinants. Asia-Pacific Journal of Operational Research, vol. 30 (1).
39. Nathan A. and Neave E. (1992). Operating Efficiency of Canadian Banks. Journal of Financial Services Research, vol. 6, pp. 265-76.
40. Ngo D.T. (2010a). Evaluating Vietnamese Commercial Banks Using Data Envelopment Analysis Approach (Vietnamese). SSRN Electronic Journal.
41. Ngo D.T. (2012b). Measuring the Performance of the Banking System: Case of Vietnam (1990-2010). Journal of Applied Finance and Banking, vol. 2 (2), pp. 289-312.
42. Nguyen V.H. (2008). ‘Ranking Efficiency of Commercial Banks in Vietnam with Super Slacks-based Model of Data Envelopment Analysis’. International Conference: Proceedings of DEA Symposium. Seikei University, Tokyo, Japan, pp. 23-32.
43. Nguyen H.S. and Tran T.T. T. (2012). Tai cau truc he thong ngan hang - kinh nghiem quoc te va ham y cho Viet Nam. Available at: http://123doc.org/document/1148885-tai-cau-truc-he-thong-ngan-hang-kinh-nghiem-quoc-te-va-ham-y-cho-viet-nam-pdf.htm (Accessed 8 Sep. 2015).
44. Nguyen Q.H. (2014). Tai cau truc he thong ngan hang thuong mai Viet Nam. Available at: http://buh.edu. vn/download.aspx?id=3709&ids=3894 [Accessed 8 Sep. 2015].
45. Nguyen V.H. (2007). Measuring Efficiency of Vietnamese Commercial Banks: An Application of Data Envelopment Analysis (DEA). Technical Efficiency and Productivity Growth in Vietnam. Publishing House of Social Labour, Tokyo.
46. Onji K., Vera D. and Corbett J. (2012). Capital injection, restructuring targets and personnel management: The case of Japanese regional banks. Journal of the Japanese and International Economies, vol. 2 (4), pp. 495-517.
47. Paradi J. and Zhu H. (2013). A survey on bank branch efficiency and performance research with data envelopment analysis. Omega, vol. 41 (1), pp. 61-79.
48. Pazarbasioglu C. and Dziobek C. (1997). Lessons from Systemic Bank Restructuring: A Survey of 24 Countries. IMF Working Papers, vol. 97 (161), p. 1.
49. Peet J., Kim J., Coates N., Ma W., Moses D., Heeger A. and Bazan G. (2007). Efficiency enhancement in low- bandgap polymer solar cells by processing with alkane dithiols. Nature Materials, vol. 6 (7), pp. 497-500.
50. Soltész, U. and Von Köckritz, C. (2010). From State Aid Control to the Regulation of the European Banking System - DG Comp and the Restructuring of Banks. Euro Comp J., vol. 6 (1), pp. 285-307.
51. The State Bank of Vietnam (2015). Ngân hàng Nhà nước Việt Nam [online]. Available at: http://www.sbv. gov.vn/portal/faces/en/enpages/home?_afrLoop=10902595295298835&_afrWindowMode=0&_afrWindo wId=tzgxbq6x6_83#%40%3F_afrWindowId%3Dtzgxbq6x6_83%26_afrLoop%3D10902595295298835%26_ afrWindowMode%3D0%26_adf.ctrl-state%3Dtzgxbq6x6_131 (Accessed 8 Sep. 2015).
52. The World Bank (2000). East Asia: recovery and beyond. Available from: http://documents.worldbank.org/curated/en/2000/05/443548/east-asia-recovery-beyond (Accessed 8 Sep. 2015).
53. Thoraneenitiyan N. and Avkiran N. (2009). Measuring the impact of restructuring and country-specific factors on the efficiency of post-crisis East Asian banking systems: Integrating DEA with SFA. Socio-Economic Planning Sciences, vol. 43 (4), pp. 240-252.
54. To N. H. (2013). No xau tu cac khu vuc kinh te. Available from: http://dl.ueb.vnu.edu.vn/bitstream/1247/9884/1/No%20xau%20tu%20cac%20khu%20vuc%20KT_To%20Ngoc%20Hung.pdf (Accessed 8 Sep. 2015).
55. Truong Q.C. (2013). So huu cheo trong he thong ngan hang Viet Nam [online]. Available from: http://hvnh.edu.vn/so-huu-cheo-trong-he-thong-ngan-hang-thuong-mai-viet-nam.html (Accessed 8 Sep. 2015).
56. Vu V.T. (2013). Tai co cau he thong ngan hang thuong mai o Viet Nam. Journal of Development and Integration, vol. 10 (20) (ISSN: 1859-428X), p. 17.
57. Waxman M. (1998). A Legal Framework for Systemic Bank Restructuring. SSRN Journal.
Review
For citations:
To T.D. Restructuring the Banking System: the Case of Vietnam. Review of Business and Economics Studies. 2016;4(4):32-54. (In Russ.)
Email this article 