Bank management in a changing world: An empirical examination from an emerging economy

Abstract

This research examines bank management in a changing world based on an emerging economy. The COVID-19 pandemic has significantly impacted global economies, highlighting the need for effective monitoring of inputs and costs in the banking sector, crucial for economic stability. In Vietnam, the government has prioritized oversight and implemented strategic policies to restructure the banking system, addressing issues like nonperforming loans and the inefficiency of bank management. This study employed Data Envelopment Analysis (DEA) to assess the technical efficiency of 29 Vietnamese banks in 2023 and, more importantly, focused on the input-saving solution for bank management. We found that the average efficiency score of the banks was moderate at 73.24%, with CTG emerging as the best state-owned commercial bank and SHB being considered the top joint-stock commercial bank. Importantly, the study suggested big cuts in inputs, like letting go of 97,625 employees (30.6% of original value) and closing 2,233 branches (24.1%). This could save 48 trillion Vietnamese Dong (VND) in operating costs. Input savings are crucial for improving banking efficiency in the post-pandemic landscape in Vietnam and for other emerging economies.