Self-Organising (Kohonen) Maps for the Vietnam Banking Industry

Man Ha, Christopher Gan, Cuong Nguyen and Patricia Anthony
Additional contact information
Man Ha: Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, P.O. Box 85084, Lincoln, Christchurch 7674, New Zealand
Christopher Gan: Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, P.O. Box 85084, Lincoln, Christchurch 7674, New Zealand
Cuong Nguyen: Department of Financial and Business Systems, Faculty of Agribusiness and Commerce, Lincoln University, P.O. Box 85084, Lincoln, Christchurch 7674, New Zealand
Patricia Anthony: Department of Environmental Management, Faculty of Environment, Society and Design, Lincoln University, P.O. Box 85084, Lincoln, Christchurch 7674, New Zealand

JRFM, 2021, vol. 14, issue 10, 1-18

Abstract: This is the first study to use the self-organisation (Kohonen) map technique, an artificial neural network based on a non-supervised learning algorithm, to categorise Vietnamese banks into super-class groups. Drawing on unbalanced yearly data from 2008 to 2017, this study identifies two super-class groups (one and two). While group one consists of joint stock banks, group two consists of commercial state and joint stock banks. Using the non-structural indicator, the Lerner index, to capture market power, and the data enveloped analysis technique to measure bank performance, our result shows significant differences in Lerner scores (which represent bank market power) of the two groups of banks. Differences in the Lerner scores provide evidence of a group of strong banks that is isolated from other banks. This implies that this strong bank group has the potential to be monopolist and impairs Vietnam’s competitive banking environment. The reason is that group two banks may be more profitable due to greater market power, whereas group one banks may struggle to cut costs to remain viable. These findings provide a better understanding for bank executives, policymakers and regulators of the Vietnam banking industry, and ensure an efficient and competitive Vietnam banking environment.

Keywords: self-organisation maps; artificial neural networks; monopolists; market power; Vietnam (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
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