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Concentration and efficiency in the Vietnamese banking system between 1999 and 2009: A structural model approach

Thao Ngoc Nguyen (Nottingham Business School, Nottingham Trent University, Nottingham, UK)
Chris Stewart (School of Economics, History and Politics, Kingston University, London, UK)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Article publication date: 19 July 2013

1270

Abstract

Purpose

The purpose of this paper is to examine the degree of concentration and efficiency in the Vietnamese banking system using the structural model.

Design/methodology/approach

The authors apply the concentration ratio (CR), Herfindahl‐Hirschman Index (HHI) and concentration‐profitability model based upon the Structure‐Conduct‐Performance (SCP) and Efficiency Hypothesis (EH) approaches to examine 48 Vietnamese commercial banks over the period 1999‐2009.

Findings

The authors' empirical results show that the Vietnamese banking industry has become substantially less concentrated; however, large commercial banks still dominate the whole banking system. Further, their results do not support either the traditional Structure‐Conduct‐Performance or the Efficiency Hypothesis.

Practical implications

The State Bank of Vietnam needs to have policies for restructuring the system and promoting competition in the banking sector of Vietnam.

Originality/value

This is the first such study of the Vietnamese banking system.

Keywords

Citation

Ngoc Nguyen, T. and Stewart, C. (2013), "Concentration and efficiency in the Vietnamese banking system between 1999 and 2009: A structural model approach", Journal of Financial Regulation and Compliance, Vol. 21 No. 3, pp. 268-283. https://doi.org/10.1108/JFRC-10-2012-0041

Publisher

:

Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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