Open Access
Article
SciPap-1184
Innovation and Bank Efficiency in Vietnam and Pakistan
1 Faculty of Management and Economics, Department of Management and Marketing, Tomas Bata University in Zlín, Mostní 5139, Zlín 760 01, Czechia
2 Faculty of Management and Economics, Department of Management and Marketing, Tomas Bata University in Zlín, Mostní 5139, Zlín 760 01, Czechia
3 Faculty of Management and Economics, Department of Management and Marketing, Tomas Bata University in Zlín, Mostní 5139, Zlín 760 01, Czechia
4 Business Department, Agribank Tien Giang, Le Loi Street, My Tho City, Tien Giang Province, Tien Giang 84000, Viet Nam
* Authors to whom correspondence should be addressed.
Abstract: The study investigates the effect of innovation on bank efficiency and the difference in efficiency between Vietnam and Pakistan banks. The balanced panel data from 23 banks (7 banks in Vietnam and 16 banks in Pakistan) in 2011-2019 is aggregated from the State Bank of Pakistan, the Vietstock, the MorningStar, the World Bank, and the website of banks. The quantitative models' estimation result is processed by the Pooled, the Fixed-effect, the Random-effect, and the Generalized Least Square approach, and confirmed again by the Tobit and T-test approach. The outcomes gave that innovation is the negative factor of bank efficiency. With or without the effect of innovation, the bank's efficiency in Vietnam is still lower than in Pakistan. The finding indicates that bank efficiency can be enhanced by increasing bank size instead of innovation, and bank age is the barrier to utilizing innovation for enhancing bank efficiency. Moreover, we found the bank's efficiency in Vietnam can be improved more quickly than in Pakistan by increasing bank assets. The macroeconomic condition is favorable for bank efficiency in both countries.
Keywords: Innovation, Data Envelopment Analysis, Bank Efficiency, Vietnam, Pakistan
JEL classification: G20 - General, G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages
Received: 29 October 2020 / Revised: 9 February 2021 / Accepted: 14 February 2021 / Published: 19 March 2021
