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

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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

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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 non-
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

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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”.


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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…

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 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.



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Table 1.1. SWOT matrix
External
factors

Internal
Factors
Opportunities (O)
O
1,
O
2,
O
3
,………….
Significant external
factors

Threats (T)
T
1,
T
2,
T
3

,…… ……
External significant
threats
Strengths (S)
S
1
, S
2
,
S
3
,…………….
Banks’ internal
strength
Combination S+O
Turning strengths
into opportunities
Combination S+T
Turning strengths into
threat-reducing
factors
Weakness (W)
W
1
,W
2
,W
3
,…………
Banks’ internal

weaknesses
Combination W+O
Employing
opportunities to
reduce
disadvantages
Correcting weakness
to make use of
opportunities
Combination W+T
Correcting weakness
to reduce threats


- Advantages and Disadvantages
- Applicability
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.

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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
Total
significance
score in IE
matrix


Strong
3.0-4.0
Average
2.0-2.99
Weak
1.0-1.99
Strong
3.0 – 4.0
I

II
III
Average
2.0 – 2.99
IV
V
VI
Weak
1.0 – 1.99
VII
VIII
IX
- Advantage and disadvantage
- Applicability
1.2.3. Factor Analysis
General factors are described as linear combination of observation
variables. Assuming that the factor analysis comes up with i factors.
This means:
F
i
= W
i1
X
1
+ W
i2
X
2
+ W
i3

X
3
+ …. + W
in
X
n
o F
i
: the estimated values of the factor i
o W
ik
: 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

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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-, M-
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.
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

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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 : 1
st

group includes current competitiveness index current and 2
nd
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

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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.

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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)

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2.2.2.3. Status of governance capacity
 Profitability of the banking system
Table 2.3. ROA and ROE of some commercial banks
Bank
Year 2011
Year 2012

ROA
ROE
ROA
ROE
AgriB
0.60%
11.60%
0.53%
7.45%
BIDV
1.20%
13.20%
0.66%
11.41%
Vietcombank
0.90%
17.00%
1.03%
10.20%
VietinB
0.60%

26.70%
1.13%
16.34%
MHB
0.20%
2.60%
0.25%
2.93%
Techcombank
1.80%
28.10%
0.45%
6.07%
Average
1.60%
13.90%
0.75%
8.11%

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.

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Table 2.5: Percentage of loans / customer deposits in 2012
Commercial bank
Abbreviation
Year 2012
Mekong Development bank
MDB
259.9%
Petrolimex and Gas bank
PG Bank
117.6%
Vietnam Thuong Tin commercial
bank
VTTB
115.9%
Bao Viet commercial bank
BVB
114.2%
Orient Commercial Bank
OCB
113.8%
Dai A Bank
Dai A Bank
110.4%
Mekong Housing Bank
MHB
106.7%

TienPhong commercial bank
Tienphong Bank
103.1%
Saigon Bank for Industry and Trade
SGB
102.8%
Saigon Commercial bank
SCB
102.4%
Dong A Commercial bank
Dong A Bank
101.3%
(Source: Author collected)
2.2.2.4. Situation of resources
Although labor is a competitive advantage of Vietnam by cheap
labor costs, however, the labor productivity is low, mostly manual
labor, working style and lack of professional. This is also reflected in
the quality of human resources in commercial bank not high and equal.
2.2.2.5. Situation of technology level
Currently there are 40 commercial banks in the country to deploy
core banking system ( Core Banking ) enables data administrators
centralized at the Head Office, reduces operating risk in banking
business. Due to modern banking technology, most commercial banks
were involved in the operation system SWIFT international payments
in order to provide international settlement services to clients with fast
speed, high security, safety and low cost .
2.2.2.6. Strengths, weaknesses, opportunities and threats of the
commercial banking Vietnam today

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Strengths
S1: broad network
S2: The staff are knowledgeable
about the local market and
cultural proficiency of the
customer.
S3: Commercial banks’
customers are large and diverse
S4: Large market share of credit
operations, raising capital and
services.
S5: Activity-based core banking
technology, centralized data
management, helping to improve
the quality of banking products
and services.
Opportunities
O1: International economic
integration has motivated
innovation and reform of
Vietnam's banking system in many
ways, such as capital, operating
mode, change the way of
thinking,

O2: Interest and special support
from the State Bank.

O3: Favorable legal environment
and schedule of WTO

commitments facilitate domestic
banks have time to consolidate and
improve themselves.
Weaks
W1: Although the equity capital
of Vietnam commercial banks
continuously increase in recent
years, but in general the equity
capital still very small compared
with regional banks
Threats
T1: Due to the low
competitiveness, opening up
financial markets will increase
amount of banks who have strong
financial resources, technology,
management skills, which makes
increasing competitive pressure.
W2 : Products and services are
not diverse , plentiful , largely
focuses only on the traditional
business , not high utility .
W3 : The quality of Vietnamese
banking services (expressed in
operational processing speed ,
safety , accuracy , usability ) is
not high , transaction procedures
are cumbersome , complex ,
W4 : Capacity management and
administration is limited in

comparison with the modern
requirements of commercial
banks
W5 : Writing systems ,
T2 : Pressure of innovative
appropriate technologies and
techniques to be able to compete
with foreign banks .
T3 : The legal system in the
country , market institutions are
incomplete , asynchronous and
inconsistent, many shortcomings
compared to international
integration requirements for banks
.
T4 : The profitability of most
Vietnam commercial banks is
lower than banks in the region ,
which limits the possibility of
establishing risk reserve fund and

15
mechanisms and policies of
commercial banks are still
incomplete
W6 : Lack of association among
commercial banks.
W7 : The implementation of
Vietnamese commercial banks’
modernization programs is

uneven, which leads to limitation
of collaboration in the
development of products,
services and bank management.
W8 : Business activity is
seriously about quantity
development, not goes into
quality yet.

W9 : The Vietnam commercial
banks invest too much in state
enterprises , while the majority
of enterprises have low financial
rank and weak competitiveness
branches . This is potentially risk
for the banks.
W10: Workforce with
professional ethics and high
professional who meet the
operation requirements of
modern banking in terms of
integration is largely lacking.
equity increase fund .
T5 : In the integration process ,
Vietnam's banking system is also
strongly affected by the world
financial markets , especially in
foreign exchange rates , interest
rates , foreign currency reserves ,
at the same time to make more

services and international
commitments .
T6 : Economic integration ,
increased international capital
transactions and risks of the
banking system , whilst
mechanisms and information
system of banking supervision is
still very primitive , unsuitable for
routine.
T8 : Structure banking system
despite strong growth in width but
also cumbersome , organizational
models are not scientific.
T9 : Vietnam Commercial banks
have no wage policies and
reasonable remuneration to attract
and retain good employees .
T10: The branches of foreign
banks are allowed to expand its
network and become retail
banking with modern technology
T11: The competitive advantage of
Vietnam's commercial banks is
now very weak

2.3. Evaluating results of the application of the SWOT to analyze
the competitiveness of Vietnam's commercial banks
2.3.1. Achievements
Using the SWOT model in evaluating the competitiveness of

Vietnamese commercial banks helps us easily have an overview of the
strengths, weaknesses, opportunities and challenges of Vietnam's

16
commercial banks in the current context to carry out the next steps such
as strategy formulation, strategic tactical objectives and specific control
strategies mechanisms. With clear and special analysis result, managers
can make feasible and effective policies to restructure the banking
system of Vietnam into a modern safe banking system, with sustainable
development.
2.3.2. Existences and cause of these problems.
Results of competitiveness analysis using the SWOT matrix to
create a list of strengths , weaknesses , opportunities and challenges of
the commercial banks in Vietnam but the factors in SWOT matrix are
not attached a certain weight or do not indicate the level of importance
of each factor for the competitiveness of banks , not quantified so there
is no scientific basis for ranking the competitive capacity of all
Vietnamese commercial banks .
2.3.2.2 . The cause of the existence
- Due to the lack of a full updated and centralized banking
information data base serving to assess the competitiveness of
commercial banks in Vietnam.
- Because the SWOT model applied to analyzes the
competitiveness of Vietnam's commercial banks in chapter 2 only uses
quantitative methods of analysis and methodology experts .
- Due to technical limitations of the SWOT model
Chapter 2 conclusion
The analysis of the operation condition and competitiveness of
commercial banks in Vietnam through using SWOT model partially
reveals the strengths and weaknesses and the opportunities and threats

of the commercial banks in Vietnam in the context of international
integration. However, the authors also analyzed to assess the
advantages and some drawbacks of using SWOT model in
competitiveness analysis of the Vietnam banks as a basis to choose a
model that analyzes the competitiveness of commercial banks in
Vietnam more advantages in chapter 3.
Chapter 3
SELECTING A COMPETITIVENESS ANALYSIS MODEL OF
SOME COMMERCIAL BANKS IN VIETNAM AND SOME
RECOMMENDATION REGARDING APPLICABILITY
3.1. Bases of selecting a competitiveness analysis model of
commercial banks in Vietnam
3.1.1. Based on previous research findings regarding selecting a
competitiveness analysis model of commercial banks in China and Iran.
3.1.2. Based on the Dissertation research model.

17
3.1.3 Based on drawbacks of currently applied models in Vietnam
3.2. Building a factor analysis model.
3.2.1. Bases of selecting variables for the model.
Based on previous research findings, the Dissertation forms a set of
indicators including 18 indicators measuring comprehensive
competitiveness of commercial banks in Vietnam with 15 quantitative
indicators and 3 qualitative indicators. 3 quantitative indicators are
measured as follows:
(i), Bank management based on general efficiency: to measure
general efficiency of each bank, DEA-solver, super- efficiency and
constant scale-based efficiency model are used.
0
, ,2,1,

, ,2,1,
1
1
,







i
jn
I
i
ini
I
i
imijm
z
z
Nnxxz
Mmyzyts
pMin




(ii) Business Reform level measured by net technical efficiency
level. Many researches have shown that there is high correlation

between net technical efficiency level and Business Reform level.
1
0
, ,2,1,
, ,2,1,
1
1
1
,










I
i
i
jn
I
i
ini
I
i
imijm
z

z
z
Nnxxz
Mmyzyts
pMin

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(iii)Variables represent the quality of human resources measured by
average income.
∑ labor cost/ ∑ number of employees
3.2.2. Statistic description of research data
Data used in the models which estimated the efficiency level were
collected from 40 Vietnamese commercial Banks’ assets balance sheets
and reports on income and expences form 2006 to 2012 (including 5
state commercial banks, and 35 joint stock commercial banks). Based
on collected data and many other researchers’ recommendations related
to the scope of this Dissertation, as well as current operation of VN
commercial banks, the Dissertation has selected 18 input variables for
the factor analysis nodel and the input varialbes for approximate
variable model to calculate 3 qualitative variable, including total net
fixed assets (K), labor cost (L), total customer deposit (DEPO) and
outputs: interest income from fees and other equivalents ( Y1 ) , non-

18
interest revenue and equivalents ( Y2 ) . The two output variables were
chosen in the study of Cevdet A. Dinç Denizer and Mustafa (2000 ) ,
Matthews , C. and tripe , D ( 2002 ) , Richard S. Barr , Kory A. Killgo ,
and Thomas F. Siems (1999 ) , Thomas , F Siems . and Richard , S Barr

(1998 ) In order to calculate the cost-effectiveness and allocative
efficiency it a must to know the price of the input . The price of the
inputs are approximately as follows : cost of capital ( W1 ) = Expenses
on assets / total net fixed assets , the price of labor ( W2 ) = Expenses
for staff / employees and total price mobilization of capital ( W3 ) =
interest paid and equivalent expenses / capital raising
3.2.3. The results of experimental models
3.2.3.1. Testing of KMO (Kaiser-Meyer-Olkin) and Bartlett [26]
The method of testing the KMO (Kaiser-Meyer-Olkin) and Bartlett
is used to measure the compatibility of the survey samples consists of
40 commercial banks in Vietnam shown in Table 3.3.
Table 3.3. Results of KMO and Bartlett Testing
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy.
.644
Bartlett's Test of
Sphericity
Approx. Chi-Square
852.784
Df
153
Sig.
.000

Analysis results shows that EFA is finally recorded in Table 3.4
with KMO = 0.644 (>0.5) (EFA is suitable) and Sig = 0,000 (< 0.05) (
observation variables correlates with each other), total variance is
75.703 (>50%) (showing that factors can account for 75.703 %
variation of the data)
3.2.3. Practical analysis and results of ranking competitiveness of

commercial banks in Vietnam
 Data source
 Practical analysis and result
Scoring model for each factor
Factor F1: Financial capacity Factor
F1

0.186X1
0.052X2
0.06X3
0.014X4
-0.095X5
0.003X6
-0.092X7
0.026X8
0.062X9
0.007X10
0.065X11
0.186X12
0.186X13
0.183X14
0.182X15
-
0.013X16
0.021X17
0.076X18
Factor F2: Business Capacity Factor
F2

-0.007X1

0.014X2
0.027X3
0.306X4
0.382X5
0.234X5
0.027X7
-0.039X8
0.074X9
-0.342X10
0.015X11
-0.016X12
-0.034X13
-0.008X14
-0.039X15
0.063X16
-0.027X17
0.054X18

19

Factor F3: Human resource Factor
Factor F3:
F3

-0.018X1
-0.419X2
-0.412X3
0.114X4
0.062X5
-0.072X6

0.091X7
0.179X8
0.14X9
0.112X10
0.061X11
-0.018X12
-0.026X13
-0.043X14
-0.029X14
0.028X16
0.02X17
-0.084X18
Factor F4: Bank Management Technical Factor
F4

0.051X1
0.035X2
0.065X3
0.235X4
0.048X5
-0.09X6
0.036X7
0.194X8
0.094X9
0.005X10
0.079X11
0.044X12
0.018X13
0.02X14
-0.004X15

0.487X16
0.102X17
0.55X18
Factor F5: Technology Level Factor

F5
0.063X1
0.004X2
-0.037X3
0.073X4
-0.065X5
0.054X6
0.126X7
-0.332X8
-0.383X9
0.096X10
0.417X11
0.036X12
0.048X13
0.064X14
0.063X15
0.085X16
0.514X17
0.079X18

Scoring model for general ranking
With a function of contributing factors, a scoring model for general
ranking is achieved as follows:

3.3. Apply the research model in Vietnamese commercial banks’
competition capacity analysis.
3.3.1. Ranking based on competition capacity through table
By adding variables into the table, we have the total score of each
factor and the total results of 5 typical factors together of each
commercial bank among 40 choosen ones that shown in table 3.8.
Table 3.8. Results of factors and Vietnamese commercial banks’
competition capacity ranking

Ranking
F1
Ranking
F2
Ranking
F3
Ranking
F4
Ranking
F5
Ranking
F
Finance
capacity

Business
capacity
Human
resource
Manage
ment

Techniqu
es
Technolo
gy level
Competit
ion
capacity
AgriB
1
38
1
1
30
1
VietinB
2
36
3
2
31
2
BIDV
3
37
2
3
32
3
Vietcombank
4

35
4
4
35
4
Techcombank
5
31
5
5
36
5
MB
6
30
6
6
34
6
(210a)
F= (33.943 F
1
+ 13.061 F
2
+ 11.574 F
3
+9.468 F
4
+ 7.657 F
5

)/75.700


20
ACB
7
33
7
7
33
7
EIB
8
34
8
8
38
8
Sacombank
9
32
10
9
37
9
VP Bank
13
23
9
12

23
10
Dong A Bank
11
27
12
17
27
11
SHB
16
18
11
19
18
12
SCB
10
26
14
13
26
13
SeaBank
14
21
18
15
21
14

Sounthern
Bank
15
25
17
14
25
15
MSB
12
28
15
10
28
16
LPB
17
24
16
23
24
17
OceanBank
18
19
13
18
19
18
VIBank

19
29
19
16
29
19
HDB
20
15
20
21
15
20
An Bình
21
20
21
20
20
21
NASB
22
17
23
22
17
22
OCB
23
14

24
25
14
23
MHB
24
22
33
11
22
24
VAB
25
16
28
26
16
25
Navibank
26
13
27
29
11
26
GDB
27
11
29
32

13
27
PG Bank
28
2
22
33
3
28
Kien long
29
3
30
30
2
29
GP Bank
30
12
26
24
12
30
Dai A Bank
31
6
31
27
6
31

Nam A Bank
32
4
25
28
4
32
SGB
33
9
32
31
10
33
Tienphong
Bank
34
7
34
36
8
34
Trust Bank
35
1
36
34
1
35
WEB

36
8
37
37
7
36
BVB
37
5
35
35
5
37
MDB
38
10
38
38
9
38

3.3.2. Analysing Vietnamese commercial banks’ competition capacity
via a model of factor analysis
3.3.2. Analyze the competitive ability of Commercial Banks of Vietnam by
Factor Analysis Model:


21

In summary, the state-owned commercial banks keep the leading
positions in aggregate competitive ability ranking. The majority of this
group of banks have strong financial ability, strong brand, those also
leads in investing in technological innovation, practical approach of
advanced management technques and can attract high-quality resources
in compare with the existing small commercial banks.
3.3.3. Evaluating advantages and disadvantages of factor analysis
model and SWOT model
With factor analysis model, a system of factors will be created
through scientifically analysising and determining a corresonding
variable with a comparison indicators subjectively and appropriately
based on EFA.
Factor analysis can employ potential perspectives and other
features that are unavailable by direct analysis.
Using factor analysis model can be rather simple and cost-effective
if good understanding of theoretical background is assured
Factor analysis was able to assess both subjective and objective
factors, the current competitive factors and the potential impacts on the
competitiveness of commercial banks by selecting suitable variables for
analysing purpose .
3.3.4. Conditions of applying factor analysis model in analyzing
competitive ability of commercial banks in Vietnam
- Commercial banks in Vietnam need to form a research division of
the competitiveness of banks in order to fully exploit their advantages
in competition, and to aware of the strengths and weaknesses of
competitors as well; to give advices in making accurate competitive
strategy, to limit the risks in business.
- Policies of expert training in this field should be provided.
Besides the knowledge of mathematics, pattern analysis, the theoretical
knowledge on critical research should be equipped for experts in bank

22
competitiveness rating, in order to name accurately the elements those
are splitted out from the VARIMAX rotation.
- It is neccessary to properly recognize the role and importance of
competitiveness analytical model, which is a tool to help accurately,
comprehensively assess and reflect the competitive advantages of the
commercial bank and its competitors as well, to propose appropriate
business strategy to ensure market share and to maintain profit growth
for banks in terms of international integration, with the participation of
gross and international banks.
- Each commercial bank is required to build themselves an
information system, a full and up-to-date database about the bank and
its competitive banks.
- Create the system of statistical data on the activities of
commercial banks
- Commercial banks need to have the appropriate investment in
technology and policy of incentives for people working in this area
because it requires creativity in the selection of data, model selection
and also research results deciding as a basis for decision making.
- NHTM cần nâng cao chất lượng phân tích và xử lý thông tin trên
cơ sở một phần mềm đủ mạnh SPSS với hệ thống các tiêu chí đầy đủ,
khách quan và khoa học cả về định tính và định lượng, cả về góc độ tài
chính và góc độ phi tài chính.
- Commercial banks are also demanded to improve the quality of
analysing and information processing on the basis of a strong SPSS
software with the criteria system of fully, scientifically and objectively,
in both qualitative and quantitative aspects, both financial perspective
and non-financial perspective.
3.4. Recommendations in applying factor analysis model in

assessing the competitiveness of commercial banks in Vietnam.
3.4.1. To the Government of Vietnam and the Authorities
- The Government should accelerate the process of restructuring the
commercial banking system in Vietnam, the merger of small banks to
ensure banks have sufficient capacity and technological level to
participate effectively compete [29].
- Create a legal framework for disclosure competitiveness ranking
of commercial banks as a basis for the proclamation of the results of the
study and research of the companies operating in this field, avoid the
reaction of the evaluated organization and society.
- Forming an independent research agency that takes part in
ranking the competitiveness of nations, local, ministries, businesses,
- The Government should have the appropriate investment for

23
research & statistic institutions to build a full, up-to-date statistical
databases in order to build an annual accurate analysis model of ranking
of competitive ability of banks.
3.4.2. To the State bank of Vietnam and relevant Ministries:
- Create a legal framework for the model of new credit institutions ,
organizations those support for the activities of credit institutions , such as:
Company of competitiveness rankings , Company of credit ranking,
currency brokers to develop a system of credit institutions
- Creation of financial database, data entering, control of reliability
of the data, proceed with the analysis of the research factors, form a
system of factors those practically affect under the statistical criteria,
compare with expectations of banks about those factors and suggest
measures to strengthen / change / or adjust these factors.
- The demand of training policy, updating training knowledge,
specializing staff, and providing database related to staff who is responsible

to analyze and assess the competitive ability of commercial banks.
- To minimize the disadvantages of the model, banks should conduct
regular research and constantly update competitiveness ranking.

CONCLUSION

Due to drastic changes of the banking business environment in
Vietnam in recent years, especially since 1/1/2011 when distinction
between foreign and domestic banks were removed basically under
itinerary of Vietnam's WTO accession, it is important to analyze and assess
competitiveness ranking of Vietnam commercial banks so that commercial
banks and bank managers can find out differences, advantages and
disadvantages in competitive fields of commercial banks
However, the fact is shown that the current model analysis is
difficult to achieve rating analysis of each factor, or overall general
assessment through identifing each factor score and arranging factors
in a particular order. Therefore, the Dissertation try to research system
model to analyse and measure banks’ competitiveness, it will help
bank managers realize strengths and weaknesses as well as its
advantages in comparison with domestic and foreign competitors, in
order to make competition policy in accordance with their capabilities
and contribute to improving effectiveness of governance capability and
management.
In scope and object of study, the Dissertation has demonstrated some of
the following contents:

24
Firstly, the Dissertation has been systematized theoretical basis of
competition, competitiveness, evaluation criteria and methods of
analysis of competitiveness capacity commercial banks. Besides, the

Dissertation also generalize pros and cons and these conditions
applying analytical competitiveness models of commercial banks.
Secondly, on a theoretical basis, the Dissertation used qualitative
methods and expert methods combined with SWOT matrix analysis to
analyze competitiveness of Vietnam's commercial banks to find out
strengths and weaknesses, opportunities and threats of the commercial
banks in Vietnam in condition of international integration. The research
also indicates some limitations of SWOT analysis tool proposed as a
basis to propose solutions and analytical model completion of
competitiveness of commercial banks in Vietnam in chapter 3 .
Thirdly, in conjunction with theory and status of analysis model of
competitiveness of Vietnam's commercial banks, the Dissertation has
proposed building a factor analysis model (score model) to analyse
competitiveness capacity of commercial banks in Vietnam, with
recommendations to the government , the state Bank of Vietnam and
the commercial bank in order to create favorable conditions for solution
of complete model in competitiveness capability of commercial banks
in Vietnam.
To accomplish this Dissertation, the author would like to send
sincere thank Prof. Dr. To Ngoc Hung and Dr. Tran Thi Hong Hanh
who have dedicated guidance and kind support. The author would like
to thank teachers , colleagues and staff of Commercial Bank who
helped to facilitate the author completed this Dissertation.