Abstract
Under the Vietnamese strategic partnership program, a range of foreign banks have been allowed to take minority participations in local banks. This paper studies the effect of this program on different measures of bank profitability. We demonstrate that the presence of a foreign partner had a positive impact on performance only if the financial participation was also accompanied by an active implication of foreign bankers. We also observe that whereas foreigners on supervisory board seem to boost accounting return on equity (ROE), a more operational involvement of foreigners on the executive board improves fundamental characteristics such as the net interest margin (NIM).
The authors are grateful for financial support from the “Chaire KPMG/ESCP Europe Gouvernance, Stratégie, Risques et Performance.” We also wish to acknowledge the help of Alberta di Giuli, Martin Kalck and Christophe Moussu for advice and assistance with this study.
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Notes
- 1.
The Ordinance on the State Bank of Vietnam and The Ordinance on banks, credit cooperatives and finance companies.
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Acknowledgment
The authors are grateful for financial support from the “Chaire KPMG/ESCP Europe Gouvernance, Stratégie, Risques et Performance.” We also wish to acknowledge the help of Alberta di Giuli, Martin Kalck and Christophe Moussu for advice and assistance with this study.
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Appendices
Appendices
1.1 Appendix A1: Data availability
Banks | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Total |
|---|---|---|---|---|---|---|---|---|
ABB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
ACB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
Agri | 1 | 1 | 1 | 1 | 1 | 1 | N/A | 6 |
BacA | N/A | N/A | N/A | N/A | N/A | 1 | 1 | 2 |
BIDV | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
BV | 1 | 1 | 1 | 1 | 4 | |||
DaiA | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
DongA | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
EIB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
Ficom | N/A | 1 | 1 | 1 | 1 | 4 | ||
GP | N/A | N/A | 1 | 1 | 1 | N/A | N/A | 3 |
HBB | 1 | 1 | 1 | 1 | 1 | 1 | 6 | |
HD | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
KL | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
LV | 1 | 1 | 1 | 1 | 1 | 5 | ||
MariB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
MB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
MDB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
MHB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
NA | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
NV | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
OCB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
OceanB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
PG | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
Sacom | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
SB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
SCB | 1 | 1 | 1 | 1 | 1 | N/A | 1 | 6 |
Sea | 1 | 1 | 1 | 1 | 1 | 1 | N/A | 6 |
SG | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
SHB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
Tech | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
TN | N/A | 1 | 1 | 1 | 1 | 4 | ||
TPB | 1 | 1 | 1 | N/A | N/A | 3 | ||
Trust | N/A | 1 | 1 | 1 | 1 | 1 | N/A | 5 |
VA | N/A | 1 | 1 | 1 | 1 | 1 | 1 | 6 |
VCB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
VIB | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
VietCap | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
VietIn | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 7 |
1.2 Appendix A2: Bank types in Vietnam
# | Category | 2010 | 2011 | Total assets (bil VND) 12/31/2012 | Total assets (%) 12/31/2012 |
|---|---|---|---|---|---|
1 | State-owned commercial banks | 5 | 5 | 2,201,660 | 43 % |
2 | Policies banks | 1 | 1 | ||
3 | Development banks | 1 | 1 | ||
4 | Joint-stock commercial banks | 37 | 35 | 2,159,363 | 42 % |
5 | Joint-venture banks | 5 | 4 | 555,414 | 11 % |
6 | Foreign banks branches | 48 | 50 | ||
7 | 100 % foreign-owned capital banks | 5 | 5 | ||
8 | Financial companies | 17 | 18 | 154,857 | 3 % |
9 | Financial leasing companies | 13 | 12 | ||
10 | Central people’s credit funds | 1 | 1 | 14,485 | 0 % |
11 | Local people’s credit funds | 1,057 | 1,095 | ||
12 | Small-sized financial organization | 1 | 1 | ||
13 | Foreign credit institutions representative offices | 48 | 50 | ||
1,239 | 1,278 | 5,085,779 | 100 % | ||
Total VN commercial banks | 42 | 40 |
1.3 Appendix A3: Correlation matrix
* indicates statistical significance at the 5 % level
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Phung, G., Tröge, M. (2015). Improving Efficiency of Emerging Market Banks: A Matter of Ownership, Control, or Getting One’s Hands Dirty?. In: Chatterjee, S., Singh, N., Goyal, D., Gupta, N. (eds) Managing in Recovering Markets. Springer Proceedings in Business and Economics. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1979-8_26
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