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ICT as a Key Determinant of Efficiency: A Bootstrap-Censored Quantile Regression (BCQR) Analysis for Vietnamese Banks

Author

Listed:
  • Tu D. Q. Le

    (Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

  • Thanh Ngo

    (School of Aviation, Massey University, Palmerston North 4442, New Zealand
    University of Economics & Business, Vietnam National University, Hanoi 100000, Vietnam)

  • Tin H. Ho

    (Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

  • Dat T. Nguyen

    (Institute for Development and Research in Banking Technology, University of Economics and Law, Ho Chi Minh City 700000, Vietnam
    Vietnam National University, Ho Chi Minh City 700000, Vietnam)

Abstract

There is evidence that ICT developments can improve bank efficiency and performance. Previous studies often employ data envelopment analysis (DEA) to first examine bank performance and then use a second-stage regression to explain the influences of other environmental factors, including ICT, on such efficiency. Since DEA efficiency scores are bounded between the (0, 1] intervals, Tobit and truncated regressions are commonly used in this stage. However, none has accounted for the skewness characteristic of DEA efficiency. This paper applied a bootstrap-censored quantile regression (BCQR) approach to triply account for the issues of a small sample (via bootstrap), bounded intervals (via censored regression), and skewness (via quantile regression) in DEA analysis. We empirically examined the efficiency and performance of 27 Vietnamese commercial banks in the 2007–2019 period. The efficiency scores derived from our first stage revealed that they are skewed and thus, justify the use of the BCQR in the second stage. The BCQR results further confirmed that ICT developments could enhance bank efficiency, which supports the recent policy to restructure the Vietnamese banking sector toward innovation and digitalization. We also examined the impacts of other factors such as bank ownership, credit risk, and bank size on efficiency.

Suggested Citation

  • Tu D. Q. Le & Thanh Ngo & Tin H. Ho & Dat T. Nguyen, 2022. "ICT as a Key Determinant of Efficiency: A Bootstrap-Censored Quantile Regression (BCQR) Analysis for Vietnamese Banks," IJFS, MDPI, vol. 10(2), pages 1-15, June.
    • Handle: RePEc:gam:jijfss:v:10:y:2022:i:2:p:44-:d:840242
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    2. M. Rahila Begam & Manivannan Babu & M. M. Sulphey, 2024. "Development and Validation of an Islamic Investor’s Sentiment Scale for Stock Market Investment," Business Perspectives and Research, , vol. 12(1), pages 26-44, January.
    3. Quyen Le Hoang Thuy To Nguyen, 2024. "The relationships between some macro indicators and digitalization process: A study in the Southeast region in Vietnam," HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE - ECONOMICS AND BUSINESS ADMINISTRATION, HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE, HO CHI MINH CITY OPEN UNIVERSITY, vol. 14(3), pages 44-58.
    4. Mohammad Ashraful Ferdous Chowdhury & Mohammad Abdullah & Nurun Nowshin Chowdhury Nazia & Debarshi Roy, 2023. "The nonlinear and threshold effects of IT investment on the banking sector of Bangladesh," Economic Change and Restructuring, Springer, vol. 56(6), pages 4253-4283, December.
    5. Ting Li Liu & Muhammad Mateen Naveed & Sohaib Mustafa & Muhammad Tahir Naveed, 2024. "Analysing the impact of digital technology diffusion on the efficiency and convergence process of the commercial banking industry of Pakistan," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-27, December.

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