Measuring Technological Progress and Productivity Growth in Vietnam’s Banking Industry

The relationship between the banking system and other entities impacts the overall national economy. This connection has grown stronger over the past few decades. Assessing individual banks’ performance is important for understanding their market position and providing useful insights for practitioners. This study assesses performance of 17 commercial banks in Vietnam from 2017 to 2022 by employing the Malmquist productivity index and data envelopment analysis (DEA). The assessment covers seven dimensions of bank performance, including operating expenses, assets, liabilities, and deposits as inputs, with loans, bad debt, and profit before tax as outcomes. Utilizing the Malmquist productivity method, the study indicates that banks’ total productivity growth indices, which are then decomposed into technological and efficiency changes. According to the Malmquist index results, most banks experienced a decline in productivity from 2017 to 2022, showing reductions in both technical change and productivity indexes. This research offers a thorough examination of the performance of commercial banks in Vietnam, providing insights for managers in the banking sector. The findings bring implications for sustainable development and offer strategic recommendations at the bank’s managerial level.