Evaluating the Efficiency of Vietnamese Commercial Banks using Data Envelopment Analysis

This study uses Data Envelopment Analysis (DEA) method to estimate the technical efficiency and scale efficiency of Vietnamese commercial banks. The overall technical efficiency was measured by CCR model and the technical efficiency in terms of managerial skills was evaluated by BCC model. The findings indicate larger banks functioned better than smaller banks in terms of management skills, but there was not much difference among the groups in terms of average overall technical efficiency. State-owned and listed banks obtained higher efficiency levels than non-state-owned and unlisted banks. Finally, M&A activities also showed some interesting results. The study provides strong discussion points for consideration in future policy development by practitioners and academics aiming to improve the efficiency of the banking system. A recommendation for further research is to use a different range of inputs/outputs and analyse the data using a combination of parametric and non-parametric tools. Keywords: Banking Efficiency, Commercial Banks, DEA, Financial Sector, Vietnam