Ownership Structure and Efficiency of Banking Industry in China and Vietnam - A Political View

Manh-Trung Phung, Cheng-Ping Cheng, Chen-Yu Kao


Ownership structure and the performance of banking industry have been long considered as a matter of debate. Despite of differences in perspective, both “development view” and “politics view” approve the desire of governments to control financial institutions through their ownership structure. This paper adopts the two-stage stochastic frontier analysis (SFA) to examine the relation between ownership structure and bank’s efficiency in two long historic communism countries – China and Vietnam with the consideration of some political factors. Our result consistently indicates that banks with foreign-controlled shareholders in both countries can increase their efficiency significantly. Additionally, we uncover an interesting phenomenon that is during the election years, state-owned banks in China and Vietnam outperform the others. These banks are also the most beneficiaries from the economic expansion. Finally, meta-frontier is utilized to compare the relative performance of banking industry in these two countries.

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DOI: https://doi.org/10.5430/ijfr.v9n3p61

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

This journal is licensed under a Creative Commons Attribution 4.0 License.

International Journal of Financial Research
ISSN 1923-4023(Print)ISSN 1923-4031(Online)


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