mô hình phân tích năng lực cạnh tranh của các ngân hàng thương mại việt nam bản tóm tắt tiếng anh

By researching more than 50 international research papers and articles about the issues of competition and competitiveness capacity varying from national level to enterprise level, the a

INTRODUCTION

1 The inevitability of topics:

Aspiring to further integrate into the global economy after a milestone event of becoming an official member of the World Trade Organization (WTO), Vietnam has confronted with a number of challenges In this situation, the banking sector in Vietnam has undergone dramatic restructuring and reform in order to enhance its competitivenes capacity Much was achieved but more challenges are laying ahead

For that reason, a research title named “Competitiveness evaluation model of commercial banks in Vietnam” was chosen as an author’s PhD Dissertation

2 Research context

International research context

By researching more than 50 international research papers and articles about the issues of competition and competitiveness capacity varying from national level to enterprise level, the author found that a number of models

The author has researched more than 50 articles, international scientific studies of competition and competitive ability from national level, sector level to enterprise level, exposes different methods, many models have been used in analysis to figure out the relationship between internal and external elements to the competitiveness; however there have not any study that use the approximate variable models to quantify qualitative variables, thence homogeneous approximated qualitative variables with quantitative variables in the regression model

The domestic research situation

In Vietnam, there are no studies on the competitiveness analysis model in Vietnam commercial banks based on the factor analysis method It is clear that in this area, no studies provide a quantitative model to evaluate the competitiveness of banks in Vietnam Each of these research projects have analyzed one or several discrete indicators

of competition in the sector

3 Aims of research:

- Categorize the basic theoretical issues of competition, competitiveness capacity and competitiveness evaluation model of commercial banks

- Research on the issues of competitiveness evaluation model of commercial banks in Vietnam, finding the pros and cons, thereby

recommending an ultimate model of competitiveness evaluation for Vietnamese commercial banks

- Recommendations an ultimate model of competitiveness evaluation for Vietnamese commercial banks

- An asessment of Vietnamese commercial banks regarding their competitiveness capacity, then scoring them based upon an F competitivenes index

4 Objectives and Scope of the Disseration

4.1 Objectives of the Dissertation

- A research on the competitiveness evaluation model of commercial banks 4.2 Scope of the Dissertation

- The research focuses on commercial banks in Vietnam including state-owned commercial banks and other joint stock commercial banks, but foreign banks and joint-venture banks in Vietnam

- The reserach reviews bank data and statistics of more than 40 Vietnamese commercial banks for the period of 2006-2012 and their financial statements in 2012

5 Research methodologies:

- The Dissertation is based on methodologies of synthesising, comparing and quantity analysing by using softwares such as SPSS, AMOS and DEA, thereby finding the ultimate model

6 Major finding of the Dissertation and its contribution

The new finding of the Dissertation and its contribution are reflected in the followings:

- Scope of research: The Dissertation analyses the competitiveness

capacity of all commercial banks in Vietnam including state-owned commercial banks, joint stock commercial banks Meanwhile, most previous researches focused on an individual bank or a brand or a group

of banks

- Theoretical issue: The Dissertation presents a system of criteria

in order to rank the competitiveness capacity of Vietnamese commercial banks Besides, the Dissertation categorize models of competitiveness evaluation of commercial banks and then give an assessment about their pros and cons

- Research Methodology: the Dissertation uses variables to operate

the model, those combine elements of both qualitative and quantitative

In particular, the author has used approximately variables and parametric approach (DEA) based on linear programs to evaluate quantify qualitative variables in order to save time and spending, to collect information through taking surveys together with arithmetric information gathered from financial reports, then they are consistent to

non-run in the SPSS statistical model This method of study mainly tests theories, uses the empirical natural science model, quantitative research methods those may be proved in practice and in accordance to objectivism This combination have never been referred in both domestic and foreign

- Applicability of research result: the Dissertation has set up

scientific basis for a factor analysis model to evaluate partial and comprehensive competivieness, then ranking competitiveness of commercial banks in Vietnam The application of factor analysis model

in evaluating competitiveness provides a quantitative tool to supplement for the current SWOT to determine the significance of each factor contributing to competitiveness of commercial banks and competitive advantage of each bank quickly, comprehensively and more accurately Based on these analysis results, bank managers can set

up a business plan which can be in line with the bank’s characters and agencies can design more appropriate management policies

7 Structure of the Dissertation

Along with the Introduction, Conclusion and Bibliography, the Dissertation is divided into three chapter as follows:

Chapter 1 Theoretical basis of competitiveness capacity and

competitiveness evaluation model of commercial banks

Chapter 2 Issues of competitiveness evaluation model of

commercial banks in Vietnam

Chapter 3 A selection of competitiveness evaluation model of

commercial banks in Vietnam and some policy recommendations

CHAPTER 1 THEORETICAL BACKGROUND AND THE COMPETITIVE ADVANTAGE MODEL OF COMMERCIAL BANKS 1.1 Competition and competitiveness of commercial banks

1.1.1 Definition of competition and competitiveness of commercial banks

“Competitiveness of commercial banks is the ability to maintain and expand market share, gaining increasing profit in a competitive business environment but at the same time being able to withstand disadvantaged changes of the business environment A bank’s competitiveness is demonstrated by its business productivity, profit and market share”

1.1.2 Competition in banking sector

First, commercial banks both cooperate and compete severely

against each other

Second, competition in banking sector should aim toward a healthy

environment and against systematic risk

Third, business operation and competition among commercial

banks are under influence of external factors

Fourth, Banking competition are frequently vulnerable to changes

in international financial market

1.1.3 What banking competition is about

First, competition in terms of price

Second, competition in terms of service quality

1.1.4 Necessity of improving commercial banks’ competitiveness in times of international integration

First, due to international integration, domestic competition in

Vietnam has become more intense

Second, competition among commercial banks is not only confined

to traditional product (lending and borrowing) but also in new lines of products

Third, there is an increase in the supply side of the market in times

of international integration and there is a constantly changing demand

of customers

Fourth, there is a rapid development of financial markets and other

side markets related to banking sector

Fifth, technological application is one of crucial factor contributing

to raising commercial banks’ competitiveness

1.1.3 Indicators measuring competitiveness of commercial banks

1.1.3.1 Qualitative indicators

- Reputation and brand-name of commercial banks

- Technological level

- Human resource quality

- Management ability and organizational structure

- Distribution channel efficiency and product quality

1.1.3.2 Quantitative indicators

 Financial capacity: In order to evaluate financial capacity of a commercial bank, scale of owners’ equity, asset safety rate and asset quality are used

 Operation competence Each banks’ market share is reflected

by the volume of customers, the ability to call for finance and debt scale…

 A bank’s operation efficiency can be evaluated by: absolute value of after-tax revenue, revenue growth rate, revenue structure, Return on Asset (ROA) and Return on Equity (ROE) and Net Interest Margin (NIM)

 Ability to assure liquidity including liquidity ability indicators, ratio of preliminary stock over total asset, lending/borrowing ratio

 Personnel productivity Productivity is shown by: average total asset per capita, average debt per capita, average revenue per capita

1.1.4 Influential factors of commercial banks’ competitiveness

Commercial Banks’ operation is affected by many factors, which influence directly and indirectly their competitiveness They can be divided into two groups: internal factors and external factors

1.1.5 Methods to evaluate competitiveness of commercial banks

1.1.5.1 Qualitative method: it is a qualitative data collection method

and aims at describing facts from an analyst’s view

1.1.5.2 Quantitative method: it is quantitative data collection method and

address the relation between theory and explanation-based research

1.1.5.3 Expert method

It is based on materials related to competition to synthesize competitiveness evaluation indicators and employs these direct comparison methods of these factors to evaluate competitiveness against the competitors

1.2 Competitiveness Evaluation Model of commercial banks

1.2.1 SWOT

SWOT came into being in the 60s and 70s at Standford Research Institute, the USA It is based on Michael Porter’s five forces competition theory model to determine internal and external factors SWOT model is in the form of two-row and two-column matrix with four parts: Strengths, Weaknesses, Opportunities, Threats

Table 1.1 SWOT matrix External

Threats (T)

T 1, T 2, T 3 ,…… ……

External significant threats

1.2.2 IE Model- Internal and External Evaluation Matrix

IFE-Internal Factors Evaluation matrix summarizes and evaluates significant strengths and weaknesses of banks

EFE-External Factors Enviroment matrix summarizes and quantitizes influence of external factors on banks

IFE and EFE can be implemented by 5 steps:

Step 1: Listing essential factors as determined in internal

evaluation process, including 10 to 20 factors, both strengths and weaknesses

Step 2: Categorize factors in terms of its significance from 0.0 (

insignificant) to 1.0 ( very significant) This categorization shows the relative significance of these factors toward bank’s success The total of significance level should add up to 1.0

Step 3: Rating from 1 to 4 for each factors, including: 1 stands for

the greatest weakness, 2 for the least weakness, 3 for the least strengths and 4 for the greatest strengths Then, categorization is bank-based

Step 4: Multiply significance level of each factors with its

corresponding category ( = step 2 x step 3) to come up with significance score

Step 5: Summarize all significance level of each factor to come up

with total significance level for a bank

No matter how many factors an IFR model contains, the highest total significance score possible is 4.0,the lowest score is 1.0 and the average score is 2.5 A greater-than-2.5 scores show the company is internally strong and a less-than-2.5 scores shows the company is internally weak

Total significance score in IE matrix

Average 2.0-2.99

Weak 1.0-1.99 Strong

Fi = Wi1X1 + Wi2X2 + Wi3X3 + … + WinXn

o Fi : the estimated values of the factor i

o Wik: weight or factor score coefficient from variable k to weight i

o K: variables or items

- Pros and Cons

- Applying condition

1.3 International experiences and lessons for Vietnam

1.3.1 International experience regarding competitiveness evaluation model for commercial banks in Vietnam

First is the World Economic Forum (WEF) and the Institute of

International Management Development (IMD) using indicators to measure competitiveness in the study of "national competitiveness" They argue that national competitiveness is a combination of competitive assets and competitive processes, as shown in the following formula:

National Competition = competitive assets X competitive process the WEF and the IMF use only some soft and hard index to implement index ranking While WEF focus on softer index, IMF emphasize on hard indicators Both organizations use the average score standard

deviation for the overall points competition but different weights However, both of them conduct research on national competitiveness rather than research on the competitiveness of banks

Second is CAMELS model has been applied since the 1970s that

includes six factors: C - level of capital adequacy, asset quality A-, Quality Management, Profit E-, L-and S-Liquidity sensitivity to market risk Meanwhile, the banking model ranked FIRST in Japan is considered 10 factors: business management, legal compliance, client management, protection, risk management, comprehensive risk, capital management etc With the FIRST model, management issues (non-financial) will get more attention In short, focusing on the CAMELS model analysis and inspection help to make clear forecast for the bank and precautions FIRST system is also encouraging bank's efforts to improve governance

M-Third is the ranking method used by the financial magazine including

the magazine "The Banker" magazine in the UK and "Euromoney" The organization ranked large banks on a global scale based on factors such as Tier 1 capital, assets, capital assets ratio, profit growth actually, ROE, ROA The ranking results of this organization has been widely accepted and recognized by the international financial institutions but did not consider the type of subjective factors, so cannot reflect all the components, subjective factors affecting the competitiveness of banks

Fourth is the competitiveness evaluation in the banking sector of

the Chinese scholars The researchers divided the indicators competitiveness into 2 groups: the competitiveness index present (including market size, the level of capital adequacy, asset quality, ROE, Liquidity and internationalization) and group indices potential competitiveness (including human resources, information technology, financial innovation, service providers, corporate governance and internal control) They also developed an evaluation model for competitiveness of Chinese commercial banks:

National Competition = competitive assets X competitive process

1.3.2 Lessons for Vietnam

Vietnam should build upon the reasonable distilled from the model but must take into account the particularities of the banking sector in Vietnam

- Vietnam should employ both CAMELS model and the FIRST model to have a combination result , in order to bring the best performance

- Competitiveness evaluation and ranking should be done on each factor to find out the competitive advantage of the commercial banks in

Vietnam, contributing to make policy recommendations for the management of bank executives

- Competitiveness evaluation model has to assess comprehensively and consistently based on a ranking system of signs

- Risk assessment based on long -term effects of business cycles , and together with the development trend of the bank in the future

- Develop and finalize the criteria of evaluation competitiveness based on the characteristics of Vietnam's banking system

- Develop integrated quantitative models that rank results must consider both subjective and objective factors affecting the competitiveness of commercial banks in Vietnam

- The indicators of competitiveness were divided into 2 groups : 1stgroup includes current competitiveness index current and 2nd group includes the potential competitiveness index Then build an evaluation competitiveness model for Vietnam's commercial banks as basis for ranking based on the results of each factor score and aggregate factors affecting capacity of the commercial banks

- Select the appropriate model to estimate the impact analysis of these factors to the competitiveness of the entire commercial banks in Vietnam

Conclusion of Chapter 1: In chapter 1 the author outlined the basics

of competition, the competitiveness of commercial banks and the theoretical basis of the model of competitive analysis as the basis for analyzing competitiveness of commercial banks in Vietnam in chapter 2

Chapter 2 SITUATION OF EVALUATION COMPETITIVENESS MODEL FOR COMMERCIAL BANKS IN VIETNAM 2.1 Overview of the business environment and the activities of commercial banks

in Vietnam

2.1.1 Overview of the business environment of commercial banks in Vietnam

2.1.1.1 Legal Environment In the process of integration and opening

of domestic financial markets , Vietnam has gradually changed its legal environment in accordance with international practice gradually , leading

to the formation of a fair business environment to facilitate Vietnam's interest to avoid conflicts of domestic trade laws and WTO rules

2.1.1.2 The business environment of financial services : there have

been changes in management practices in term of the number of market participants and especially the operating pattern, products and services provided to customers

2.1.2 Operational status of the commercial banking system in Vietnam

2.1.2.1 The number and network activities of commercial banks

2.1.2.2 The development of products and services

2.1.2.3 The development of distributed systems

According to statistics, the number of ATMs by banks drastically increased from 1900 in 2006 to 11700, POS 2012 is 28,100 units

2.1.2.4 Mobilization and use of investment capital by banks Banking

system has mobilized and provided a large amount of capital for the economy, accounting for an estimated 16-18% of annual GDP, nearly 50% of social investment

2.1.2.5 The income structure is not diversified, depending mainly on credit operations

Income from credit activities accounted for a large proportion of the income structure of most banks in the country In 2012, the average proportion of interest income in total income of the 10 banks in Vietnam is 76.8% For some smaller banks, this proportion is even more than 90% (LienViet bank: 92.2%, Ocean bank: 103.5%, Nam Viet bank: 93.1%, Mekong Development bank: 98.8%)

2.2 Situation analysis models in competitiveness of commercial banks in Vietnam

2.2.1 Survey in model used in the analysis of the competitiveness of Vietnam's commercial banks

The survey showed that 47.1% of surveyed commercial banks assess capacity of competitors using the SWOT analysis However, frequency of use SWOT analysis techniques to evaluate the competitiveness of rivals which accounted for 82.6%, banks frequently use the SWOT model is 47.8% and 34.8% of banks sometimes use this technique

2.2.2 The results of SWOT analysis of competitiveness of commercial banks in Vietnam

2.2.2.1 Current status of financial capability

- The capital of commercial banks has been significantly increased, until now, many banks had reached over 1000 billion to 3000 billion, now has 10 JSBs who have strategic partner with foreign banks ownership rate ≤ 30%

- Capital adequacy ratio (CAR)

Prior to 2006, the capital adequacy ratio of commercial state banks didn’t meet the minimum requirement of 8% as The decision 457/QD-NHNN *, however by the end of 2012, all Vietnamese commercial banks have achieved safety CAR minimum capital ≥ 9% prescribed in the Circular 13/TT/NHNN-2010 ** unless the global oil and gas bank

GB, CAR reached only 6.9%

2.2.2.2 Status of operation capacity

- Mobilization of capital and loans: generally, market share in deposits

and lending funds still belongs to the major state-owned commercial banks

or state-dominated shareholding as VCB, Vietinbank, BIDV, but generally tends to decrease and makes room for commercial banks and

foreign banks & corporated banks

 The size and growth rate of assets:

Chart 2.11: Raise capital and credit growth in VN

(Source: IMF, Statistic Department, SBV)

 Bad debt

(Source: SBV)

2.2.2.3 Status of governance capacity

 Profitability of the banking system

Table 2.3 ROA and ROE of some commercial banks

Chart 2.13 Percentage of net interest income (NIM)

Overall, through the diagram of the profitability ratio, Vietnam commercial banks shows SCBs have lower profitability than some of commercial join stock banks This fact shows that in case of scale equity assets as well as the greater VCSH, the problems posed to bank managers achieve higher profitability is extremely difficult in the context of increasingly fierce competition

 The ability to ensure safe operation

Complicated movements in the currency market in Vietnam in the end of 2007, early 2008 and late 2010, early 2011 has made the liquidity of the banking difficulties