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Financial liberalisation, bank ownership type and performance in a transition economy: The case of Vietnam

Phuong Thanh Le, Charles Harvie, Amir Arjomandi and James Borthwick

Pacific-Basin Finance Journal, 2019, vol. 57, issue C

Abstract: Employing a sample of Vietnamese banks covering the period 2005 to 2015, this study investigates the influence of partial, and selective, financial liberalisation on bank efficiency by ownership type in a transition economy. The key findings are: (1) state-owned banks outperformed all other ownership types; (2) selective privatisation of state-owned banks exerted a positive influence on bank efficiency; (3) rural-to-urban private bank transformation decreased banking system efficiency; (4) minority foreign ownership exerted an insignificant impact on bank efficiency; (5) business group ownership improved the provision of intermediation services but deteriorated overall bank operating efficiency. Overall, the findings suggest that the post-WTO partial-liberalisation of the banking system in Vietnam impacted banks' efficiency differently subject to ownership type, with potentially adverse implications for long term economic growth and development.

Keywords: Bank efficiency; Financial liberalisation; Ownership type; Business environment; Vietnam; Data envelopment analysis; Generalised difference-in-differences (search for similar items in EconPapers)
JEL-codes: D24 G21 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.pacfin.2019.101182

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