Applying the data envelopment analysis model to evaluate the efficiency of commercial banks in Vietnam

Abstract

The study analyzed the efficiency of 25 Vietnamese commercial banks between 2016 and 2020. This study combined Data Envelopment Analysis (DEA) application and the Malmquist Index approach to evaluate the efficiency. The author used data from the consolidated financial statements to conduct a study according to the DEA model with Variable Return to Scale (VRS) assumptions. This study selected 3 inputs (Fixed assets, Operating expense, Customer deposit) and 3 outputs (Investment Security, Customer loans, Operating income) in the intermediary approach direction. Research results showed that scale efficiency is higher than technical efficiency (DEAVRS). State-owned banks (SOCBs) were more efficient than joint-stock banks (JSCBs) during the study period. 2020 is the year banks have reduced operational efficiency due to the impact of Covid-19. Based on research, parties should have policies to improve efficiency such as improving technical and technological quality, reducing dependence on interest income, diversifying products and services, etc. The solutions contribute to increasing the operational efficiency of Vietnam's banking industry and increasing competitiveness. The study also has some limitations and suggestions to overcome in future similar research papers