ICT as a Key Determinant of Efficiency: A Bootstrap-Censored Quantile Regression (BCQR) Analysis for Vietnamese Banks

Tu D. Q. Le, Thanh Ngo, Tin H. Ho and Dat T. Nguyen
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Tu D. Q. Le: Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
Tin H. Ho: Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
Dat T. Nguyen: Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam

IJFS, 2022, vol. 10, issue 2, 1-15

Abstract: There is evidence that ICT developments can improve bank efficiency and performance. Previous studies often employ data envelopment analysis (DEA) to first examine bank performance and then use a second-stage regression to explain the influences of other environmental factors, including ICT, on such efficiency. Since DEA efficiency scores are bounded between the (0, 1] intervals, Tobit and truncated regressions are commonly used in this stage. However, none has accounted for the skewness characteristic of DEA efficiency. This paper applied a bootstrap-censored quantile regression (BCQR) approach to triply account for the issues of a small sample (via bootstrap), bounded intervals (via censored regression), and skewness (via quantile regression) in DEA analysis. We empirically examined the efficiency and performance of 27 Vietnamese commercial banks in the 2007–2019 period. The efficiency scores derived from our first stage revealed that they are skewed and thus, justify the use of the BCQR in the second stage. The BCQR results further confirmed that ICT developments could enhance bank efficiency, which supports the recent policy to restructure the Vietnamese banking sector toward innovation and digitalization. We also examined the impacts of other factors such as bank ownership, credit risk, and bank size on efficiency.

Keywords: information and communication technology (ICT); data envelopment analysis (DEA); bootstrap-censored quantile regression (BCQR); banking efficiency; Vietnam (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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