Factors affecting the technical efficiency of state-owned commercial banks: An empirical study of bank governance

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Abstract

The study examined the technical efficiency and its influencing factors within state-owned commercial banks in Vietnam during the period from 2013 to 2022. Deploying data envelopment analysis (DEA) (Banker et al., 1984) and the Tobit regression model, this study revealed that the technical efficiency and scale efficiency of these banks experienced various fluctuations and reached optimal levels in multiple years. The analysis highlights positive relationships between technical efficiency and ratios such as return on equity (ROE), earnings per share (EPS), and loan-to-deposit (LD). Conversely, the loan-to-asset (LOTA) ratio and gross domestic product (GDP) growth rate were found to have negative effects on technical efficiency. Notably, the 100 percent state-owned variable has shown a statistically significant negative influence. These findings underscore the importance of resource allocation, including the optimisation of outputs based on inputs, and emphasise the necessity of assessing factors influencing technical efficiency. Formulating strategies aimed at improving business efficiency and fostering sustainable bank development is crucial. This comprehensive analysis provides valuable insights for policymakers and bank managers to enhance the operational performance of state-owned banks in Vietnam, ensuring their long-term sustainability and contribution to the national economy.

Keywords: Efficiency, Technical Efficiency, Commercial Bank, Data Envelopment Analysis, Tobit Models

Authors’ individual contribution: Conceptualization — T.M.N.D.; Methodology — T.M.N.D and T.T.H.D.; Validation — T.T.H.D.; Investigation — T.M.H.N. and T.T.H.D.; Resources — T.M.N.D.; Data Curation — T.M.N.D. and T.M.H.N.; Writing — Original Draft — T.M.N.D. and T.T.H.D.; Writing — Review & Editing — T.M.N.D.; Visualization — T.M.H.N.; Supervision — T.T.H.D.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C12, G12, G21, G28, G31

Received: 22.04.2024
Revised: 02.08.2024; 05.09.2024; 01.02.2025
Accepted: 17.02.2025
Published online: 19.02.2025

How to cite this paper: Dang, T. M. N., Dam, T. T. H., & Nguyen, T. M. H. (2025). Factors affecting the technical efficiency of state-owned commercial banks: An empirical study of bank governance [Special issue]. Journal of Governance & Regulation, 14(1), 332–342. https://doi.org/10.22495/jgrv14i1siart9