International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12

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 Volume 12, Issue 11 (November 2025), Pages: 48-56

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 Original Research Paper

Credit risk and bank efficiency in Vietnam: DEA-DDF and Bayesian Tobit approaches

 Author(s): 

 Chau Dinh Linh *

 Affiliation(s):

 Business Administration Faculty, Ho Chi Minh University of Banking, Ho Chi Minh City, Vietnam

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 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0009-0001-9547-625X

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2025.11.006

 Abstract

This study investigates credit risk and technical efficiency of listed commercial banks in Vietnam using a two-stage approach. In the first stage, efficiency is measured by Data Envelopment Analysis with a Directional Distance Function (DEA-DDF), where loan loss provisions are treated as undesirable outputs, and lending, interest income, and non-interest income as desirable outputs. The results show that average efficiency improved from 0.861 in 2016 to 0.936 in 2023, with 2020 marking a key turning point when efficiency became more stable, reflecting the positive effects of banking restructuring policies. In the second stage, Bayesian Tobit regression reveals that return on assets has the strongest positive impact on efficiency, while non-interest income, non-performing loans, and the capital adequacy ratio negatively affect efficiency, suggesting challenges related to credit risk, income diversification, and conservative capital strategies. Overall, the findings provide evidence of risk-adjusted efficiency in Vietnamese banks and highlight the critical role of credit risk in shaping banking performance.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Credit risk, Bank efficiency, DEA-DDF, Bayesian Tobit, Vietnam

 Article history

 Received 19 June 2025, Received in revised form 16 September 2025, Accepted 12 October 2025

 Funding

This work was supported by Ho Chi Minh University of Banking (HUB), Vietnam. 

 Acknowledgment

No Acknowledgment. 

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Linh CD (2025). Credit risk and bank efficiency in Vietnam: DEA-DDF and Bayesian Tobit approaches. International Journal of Advanced and Applied Sciences, 12(11): 48-56

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 Tables

  Table 1  Table 2  Table 3  Table 4  Table 5  Table 6 

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