The performance of Vietnamese banking system under financial liberalization - measurement using DEA

Abstract

Using time trend data from 1990 to 2010, the research applied the efficiency measurement and Data Envelopment Analysis approach to evaluate the performance changes of Vietnamese banking system under financial liberalization. The DEA time trend model is a fruitful approach to analyze the banking sector through macro level data while banking level data is unavailable, for example the case of Vietnamese banks before 2000. It showed that this performance is on a decreasing trend (although a slight recover was noticed in 2009-2010) and the banking system in Vietnam is currently running under three-forth of its capacity. One important reason for this decline in performance can be explained by the increasing in the financial openness level of the economy and its banking sector toward regional and global market.