Does government financial support decrease the inefficiency of public universities? A decomposition approach

Trung Tran, Hai Trinh Thanh, Dao Van Le, Thao Trinh Thi Phuong and Phuong Nguyen Lan

Finance Research Letters, 2022, vol. 47, issue PA

Abstract: This study contributes to the literature by considering for the first time the link between government financial support and the efficiency of public universities in Vietnam. Using the Färe-Primont index decomposition approach, the study shows that the decline in the aggregate efficiency of the universities was driven by a decline in technical efficiency and in residual mix efficiency. Our analysis further reveals that while an input-based government funding system is found to decrease scale efficiency, an increase in the investment ratio for academic and research activities promotes the aggregate, allocative efficiency of public universities.

Keywords: Input-based funding; Färe-Primont index; Government financial spending; Vietnam (search for similar items in EconPapers)
JEL-codes: C33 E62 H52 I22 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612321005821

DOI: 10.1016/j.frl.2021.102651

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