The effect of mergers and acquisitions on the efficiency of Vietnam banking system during the restructuring period

Figures & data

Figure 1. Vietnam Credit Growth, GDP rate and Credit growth/GDP ratio, 2015–2019.

Table 1. Inputs and Outputs for DEA model

Intermediation approach
INPUTS	Customer deposits	The total money that customer deposited at the banks.
	Fixed assets	The value of property, land, equipment, buildings, etc.
	Operating expense	Including: Salaries and administrative expenses Insurance expenses Others.
OUTPUTS	Customer loans	The amount of money borrowed from the bank.
	Operating income	The sum of Net interest income, Net Gain (or Loss) from trading Forex, etc.
	Investment Securities	Including all types of securities purchased by the bank.
Operating approach
INPUTS	Interest Expenses	The expenses arising from deposits, short-term loans, long-term loans and debts in trading accounts.
	Non-Interest Expense	The expenses derived from commission expenses, administrative expenses, others.
OUTPUTS	Interest Income	The income from investments, credits charged to customers, other kind of credits derived from specific assets.
	Non-interest Income	The income arising from service fees, gains and losses from the sale of loans and securities, and others.

Table 2. Variables for regression model

Variables	Codename	Formula	Signal	Authors
Efficiency applied from the intermediation approach	I_Eff	$BasedonDEAscore$	$\mathrm{I}\mathrm{\_}\mathrm{E}\mathrm{f}{\mathrm{f}}_{\mathrm{i}\mathrm{t}}$	Sealey and Lindley (1977), Olson and Zoubi (2011)
Efficiency applied from the operating approach	O_Eff	$BasedonDEAscore$	$\mathrm{O}\mathrm{\_}\mathrm{E}\mathrm{f}{\mathrm{f}}_{\mathrm{i}\mathrm{t}}$	Das and Ghosh (2006), Jemric and Vujcic (2002)
Equity-to-total assets	ETA	$\frac{Equity}{Totalassets}$	$\mathrm{E}.\mathrm{T}{\mathrm{A}}_{\mathrm{i}\mathrm{t}}$	Dincer et al. (2011)
Loan-loss-reserve-to total loan	LLRTL	$\frac{Loanlossreserve}{Totalloan}$	$\mathrm{L}\mathrm{L}\mathrm{R}\mathrm{\_}\mathrm{T}{\mathrm{L}}_{\mathrm{i}\mathrm{t}}$	Jyothi Venkatesh (2014)
Cost-to-income ratio	CI	$\frac{Operatingexpense}{Operatingincome}$	$\mathrm{C}.\mathrm{I}{\mathrm{R}}_{\mathrm{i}\mathrm{t}}$	Roman and Şargu (2013)
Return-on-average-assets	ROAA	$\frac{Netincome}{Totalasset}$	$\mathrm{R}\mathrm{O}\mathrm{A}{\mathrm{A}}_{\mathrm{i}\mathrm{t}}$	Rozzani and Rahman (2013)
Gross-loan-to deposits	GLD	$\frac{Grossloan}{Deposit}$	$\mathrm{G}\mathrm{L}.{\mathrm{D}}_{\mathrm{i}\mathrm{t}}$	Rostami (2015)
Logarithm of total assets	LogTA	$Log\left(totalassets\right)$	$\mathrm{L}\mathrm{o}\mathrm{g}\mathrm{\_}\mathrm{T}{\mathrm{A}}_{\mathrm{i}\mathrm{t}}$	Gupta et al. (2020)

Figure 2. CSR versus VRS efficient frontier (Source: Huguenin, 2012).

Table 3. Descriptive Statistics of Operating Approach data (Unit: Billion VND)

Variable	Observations	Mean	Std. Dev.	Min	Max
Interest Expense	270	9,769	11,904	690.54	64,769
Non-interest Expense	270	4,088	5,366	106.82	27,959
Interest Income	270	15,538	19,624	984.33	106,468
Non-interest Income	270	2,275	3,500	(726.04)	19,985

Table 4. Descriptive Statistics of Intermediation Approach data (Unit: Billion VND)

Variable	Observations	Mean	Std. Dev.	Min	Max
Customer Deposits	270	154,825	223,833	5,232	1,269,373
Fixed Assets	270	2,176	2,652	68.37	11,436
Operating Expense	270	3,439	4,435	208.35	24,594
Customer Loans	270	138,055	210,045	3,664	1,123,403
Operating Income	270	7,349	10,568	14.98	59,281
Investment Securities	270	33,141	35,935	819.63	167,530

Table 5. Descriptive statistics of Average CAMELS variables during 2011–2019

Variable	2011	2012	2013	2014	2015	2016	2017	2018	2019
E.TA	0.1072	0.1159	0.1041	0.0926	0.0881	0.0800	0.0746	0.0778	0.0779
LLR.TL	0.0129	0.0173	0.0132	0.0133	0.0154	0.0170	0.0167	0.0154	0.0141
C.IR	0.4704	0.5761	0.6318	0.6037	0.6017	0.5879	0.5631	0.5397	0.5150
GL.D	1.1725	0.9695	0.8976	0.8415	0.8376	0.8723	0.9207	0.9304	0.9480
ROAA	0.0107	0.0078	0.0059	0.0051	0.0044	0.0052	0.0069	0.0088	0.0102

Figure 3. Trend of CAMELS variables during examined period.

Figure 4. Bootstrap DEA scores of operating approach and intermediation approach.

Table 6. Pearson’s Correlation of Intermediation Approach

	LogTA	E.TA	LLR	C.IR	GL.D	ROAA	Merger
LogTA	1
E.TA	−.6898*	1
LLR	−.0150	.1268*	1
C.IR	−.0904	−.0372	.3258*	1
GL.D	−.0094	.0817	.0251	−.0502	1
ROAA	.1297*	.2368*	−.2885*	−.5576*	.1694*	1
Merger	.2762*	−.2441*	.0212	−.0248	−.1693*	−.1493*	1

Table 7. Pearson’s Correlation of Operating Approach

	LogTA	E.TA	LLR	C.IR	GL.D	ROAA	Merger
LogTA	1
E.TA	−.6898*	1
LLR	−.0150	.1268*	1
C.IR	−.0904	−.0372	.3258*	1
GL.D	−.0094	.0817	.0251	−.0502	1
ROAA	.1297*	.2368*	−.2885*	−.5576*	.1694*	1
Merger	.2762*	−.2441*	.0212	−.0248	−.1693*	−.1493*	1

Table 8. Variance-inflation-factor (VIF)

Variable	VIF	1/VIF
E.TA	2.75	0.363226
LogTA	2.66	0.376290
ROAA	2.15	0.464470
C.IR	1.55	0.643743
LLR	1.28	0.779719
Merger	1.17	0.852484
GL.D	1.06	0.944928

Table 9. Truncated regression results from Intermediation approach

I_Eff	Coef.	Std. Err.	P-value
Log_TA	.055	.0179	0.002***
E.TA	.0428	.228	0.851
LLR.TL	.509	.554	0.359
C.I	.004	.001	0.000***
GL.D	.020	.045	0.657
ROAA	3.161	1.257	0.012**
Merger	−.0599	.0186	0.001***
Const.	.0879	.260	0.736

Note: “LogTA”: logarithm of total assets; “E.TA”: equity-to-total asset; “LLR.TL”: loan loss reserves to total loans; “CI”: cost-to-income ratio; “GL.D”: gross loan to deposits; “ROAA”: return-on-average-assets; “Merger”: dummy variable.

Table 10. Truncated regression results from Operating approach

O_Eff	Coef.	Std. Err.	P-value
Log_TA	.138	.025	0.000***
E.TA	2.237	.335	0.000***
LLR.TL	−1.005	.766	0.190
C.I	.002	.001	0.030**
GL.D	.049	.022	0.029**
ROAA	2.854	1.433	0.046 **
Merger	−.041	.019	0.028**
Const.	−1.292	.374	0.001

Note: “LogTA”: logarithm of total assets; “E.TA”: equity-to-total asset; “LLR.TL”: loan loss reserves to total loans; “CI”: cost-to-income ratio; “GL.D”: gross loan to deposits; “ROAA”: return-on-average-assets; “Merger”: dummy variable.

Table

No.	Ticker	Name
1	ABB	An Binh Commercial Joint Stock Bank
2	ACB	Asia Commercial Bank
3	Agribank	Vietnam Bank for Agriculture and Rural Development
4	Bac A	Bac A Commercial Joint Stock Bank
5	BID	JSC Bank for Investment and Development of Vietnam
6	CTG	Vietnam Joint Stock Commercial Bank for Industry and Trade
7	EIB	Vietnam Commercial Joint Stock Export-Import Bank
8	HDbank	HCM Development Joint Stock Commercial Bank
9	KLB	Kien Long Commercial Joint Stock Bank
10	Lien Viet	Lien Viet Post Joint Stock Commercial Bank
11	MBB	Military Commercial Joint Stock Bank
12	MSB	Vietnam Maritime Commercial Joint Stock Bank
13	Nam A	Nam A Commercial Joint Stock Bank
14	NCB	National Citizen Commercial Joint Stock Bank
15	OCB	Orient Commercial Joint Stock Bank
16	PGbank	Petrolimex Group Commercial Joint Stock Bank
17	PVCombank	Vietnam Public Joint Stock Commercial Bank
18	SCB	Saigon Joint Stock Commercial Bank
19	SEAbank	Southeast Asia Commercial Joint Stock Bank
20	SGB	Saigon Bank for Industry and Trade
21	SHB	Saigon - Hanoi Commercial Joint Stock Bank
22	STB	Saigon Thuong Tin Commercial Joint Stock Bank
23	TCB	Vietnam Technological and Commercial Joint Stock Bank
24	TPbank	Tien Phong Commercial Joint Stock Bank
25	VCB	Joint Stock Commercial Bank for Foreign Trade of Vietnam
26	VIB	Vietnam International Commercial Joint Stock Bank
27	Viet A bank	Vietnam Asia Commercial Joint Stock Bank
28	Vietbank	Vietnam Thuong Tin Commercial Joint Stock Bank
29	VietCapital bank	Viet Capital Bank Commercial Joint Stock Bank
30	VPB	Vietnam Prosperity Joint Stock Commercial Bank

Table

	2011		2012		2013		2014		2015
	Ope.	Inter.	Ope.	Inter.	Ope.	Inter.	Ope.	Inter.	Ope.	Inter.
ABB	0.9541	0.8156	0.8951	0.7749	0.7970	0.6871	0.7631	0.7431	0.8012	0.7573
ACB	0.9416	0.8026	0.9671	0.7967	0.8851	0.9156	0.8772	0.8578	0.9083	0.8008
Agribank	0.9797	0.9286	0.9719	0.9373	0.9155	0.9170	0.9123	0.9323	0.9835	0.9160
Bac A	0.9559	0.9327	0.9599	0.9306	0.9447	0.9105	0.9459	0.9255	0.9473	0.9183
BID	0.9365	0.9333	0.9595	0.9384	0.9388	0.9093	0.9356	0.9311	0.9391	0.9217
CTG	0.9629	0.9439	0.9750	0.9413	0.9621	0.9346	0.8906	0.9542	0.9462	0.9415
EIB	0.9647	0.7652	0.9778	0.9577	0.8920	0.9457	0.7855	0.9028	0.8287	0.7717
HDbank	0.8984	0.9474	0.9776	0.9715	0.9357	0.8083	0.8504	0.7522	0.8690	0.8274
KLB	0.9589	0.8943	0.9689	0.9359	0.9514	0.9173	0.9491	0.8197	0.9327	0.7683
Lien Viet	0.9670	0.9250	0.9161	0.9453	0.8623	0.7485	0.7659	0.9269	0.8680	0.8886
MBB	0.9729	0.9532	0.9633	0.9346	0.9505	0.9125	0.9410	0.9306	0.9620	0.9496
MSB	0.9577	0.9322	0.9221	0.9600	0.7982	0.7039	0.9239	0.9247	0.9291	0.9205
Nam A	0.9615	0.8714	0.9566	0.8938	0.9382	0.9173	0.8086	0.9136	0.9205	0.8546
NCB	0.8716	0.7976	0.8219	0.9703	0.7897	0.7184	0.7716	0.7244	0.7517	0.7444
OCB	0.9059	0.9595	0.9322	0.9160	0.9529	0.9532	0.8495	0.9571	0.8200	0.9606
PGbank	0.9626	0.9574	0.9655	0.9374	0.8663	0.9195	0.8385	0.8048	0.9595	0.9130
PVCombank	0.9548	0.8092	0.9556	0.9372	0.9348	0.9140	0.9208	0.7751	0.9438	0.7799
SCB	0.9548	0.9471	0.9613	0.8593	0.9403	0.6718	0.9199	0.9312	0.9293	0.9336
SEAbank	0.8906	0.9546	0.9703	0.9389	0.8242	0.9474	0.7857	0.9434	0.7829	0.8833
SGB	0.9521	0.8215	0.9599	0.9361	0.9329	0.9138	0.9176	0.9275	0.9280	0.8363
SHB	0.8885	0.9529	0.9320	0.7300	0.8758	0.7816	0.9070	0.9541	0.9436	0.9488
STB	0.9450	0.7449	0.9700	0.7545	0.9575	0.9277	0.9555	0.9274	0.8715	0.7266
TCB	0.9625	0.9545	0.8547	0.8862	0.8428	0.9142	0.9327	0.9149	0.9393	0.9245
TPbank	0.7170	0.9581	0.9596	0.9349	0.9395	0.9129	0.8233	0.9263	0.8080	0.9197
VCB	0.9579	0.9490	0.9659	0.9465	0.9549	0.9305	0.9211	0.9504	0.9323	0.9380
VIB	0.9078	0.9313	0.9672	0.9388	0.9118	0.9072	0.9480	0.9300	0.8272	0.9186
Viet A bank	0.9302	0.9314	0.8884	0.7457	0.8054	0.8244	0.7637	0.9265	0.8401	0.9376
Vietbank	0.9337	0.8081	0.8488	0.9650	0.9476	0.7958	0.8292	0.7865	0.9273	0.8439
VietCapital bank	0.9526	0.8879	0.9759	0.8986	0.9359	0.8659	0.9193	0.8861	0.9363	0.8960
VPB	0.8867	0.9305	0.8668	0.9491	0.9219	0.9121	0.8859	0.9345	0.9305	0.9216

Table

	2016		2017		2018		2019
	Ope.	Inter.	Ope.	Inter.	Ope.	Inter.	Ope.	Inter.
ABB	0.7521	0.7309	0.7521	0.7499	0.7111	0.8956	0.7406	0.8156
ACB	0.8407	0.8166	0.8407	0.9114	0.8372	0.7817	0.8047	0.8026
Agribank	0.8884	0.9044	0.8884	0.9129	0.8975	0.9251	0.8852	0.9286
Bac A	0.9081	0.9016	0.9081	0.9099	0.8848	0.9269	0.9012	0.9327
BID	0.8789	0.9114	0.8789	0.9232	0.9192	0.9236	0.8928	0.9333
CTG	0.9145	0.9496	0.9145	0.9373	0.8146	0.9456	0.9035	0.9439
EIB	0.7685	0.8038	0.7685	0.8039	0.7093	0.7984	0.7027	0.7652
HDbank	0.8018	0.7355	0.8018	0.8105	0.8710	0.8978	0.8895	0.9474
KLB	0.8452	0.7958	0.8452	0.8022	0.6477	0.8651	0.6185	0.8943
Lien Viet	0.8959	0.8104	0.8959	0.7520	0.7865	0.9448	0.8032	0.9250
MBB	0.9016	0.8617	0.9016	0.7803	0.8847	0.8262	0.9038	0.9532
MSB	0.9270	0.9066	0.9270	0.9088	0.6846	0.9245	0.7312	0.9322
Nam A	0.8331	0.6916	0.8331	0.9416	0.7325	0.8693	0.7359	0.8714
NCB	0.7004	0.9238	0.7004	0.7900	0.6152	0.9311	0.6994	0.7976
OCB	0.7510	0.8784	0.7510	0.8006	0.8742	0.9548	0.9032	0.9595
PGbank	0.8436	0.9240	0.8436	0.9385	0.8924	0.9256	0.8698	0.9574
PVCombank	0.7375	0.6780	0.7375	0.7487	0.6547	0.7338	0.6734	0.8092
SCB	0.7682	0.9088	0.7682	0.9257	0.6990	0.9466	0.7162	0.9471
SEAbank	0.8933	0.9040	0.8933	0.9196	0.8667	0.9674	0.8717	0.9546
SGB	0.8946	0.8076	0.8946	0.8307	0.8698	0.8158	0.8678	0.8215
SHB	0.8365	0.9297	0.8365	0.9145	0.8082	0.9512	0.8312	0.9529
STB	0.6896	0.6665	0.6896	0.6666	0.7169	0.6923	0.7014	0.7449
TCB	0.8958	0.9206	0.8958	0.9114	0.8669	0.9272	0.8709	0.9545
TPbank	0.8072	0.9071	0.8072	0.9095	0.7921	0.9309	0.8461	0.9581
VCB	0.8979	0.9510	0.8979	0.8772	0.8788	0.9535	0.8874	0.9490
VIB	0.8334	0.9076	0.8334	0.9104	0.8247	0.9282	0.8293	0.9313
Viet A bank	0.7312	0.9073	0.7312	0.9151	0.7504	0.9263	0.7251	0.9314
Vietbank	0.8277	0.8276	0.8277	0.8053	0.6742	0.8190	0.6716	0.8081
VietCapital bank	0.7839	0.8134	0.7839	0.8306	0.6444	0.8444	0.6312	0.8879
VPB	0.8949	0.9071	0.8949	0.9122	0.8636	0.9257	0.8694	0.9305

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