Is there a trade-off between social and financial performance of public commercial banks in India? A multi-activity DEA model with shared inputs and undesirable outputs

Assessing the Performance of Vietnam’s Banks in the Era of Free Trade Agreements

The performance of banks is a great barometer of the sustainability of the economy, particularly for emerging economies. In the expansion of its economy, over the last decade, Vietnam has entered a series of free trade agreements, such as the European Union–Vietnam Free Trade Agreement (EVFTA) in 2020. In that context, this study assesses the performance of Vietnam’s banks in the period of 2020–2021 and explores the relationship between performance and various demographic and environmental variables. This study utilizes data envelopment analysis with two disposability concepts where desirable outputs (e.g., return on equity) are maximized while undesirable outputs (e.g., non-performing loan ratio) are minimized. Subsequently, Tobit and bootstrap truncated regression analyses are conducted for the testing of two hypotheses: (1) EVFTA’s commitments, including the updating of the Fintech system, may be positively associated with bank’s performance, and (2) Locations of banks, encumbered by heterogeneous levels of urban concentration and real estate development in different regions, may be associated with the banks’ performance. The findings are twofold: (1) While EVFTA can contribute to Vietnamese banks’ financial profit performance through foreign trading and hedging activities, it may harm banks’ financial health performance due to Fintech-originated bad debts and a lack of relevant regulations; and (2) Banks in southern Vietnam outperform those in northern Vietnam in managing their credit risk by better controlling of bad debts, which result primarily from the volatility of the real estate market and from better positive externalities, in terms of economic, cultural, and political conditions.

The Social Efficiency for Sustainability: European Cooperative Banking Analysis

This paper seeks to establish the relationship between economic efficiency and social efficiency to analyze the sustainability of banking in Europe. The type-effect has been analyzed, as stakeholder value banks—cooperatives and saving banks—should not be less socially and economically efficient than commercial banks. This European analysis was made using the Bankscope database, as it provides a unique insight into the stakeholder view that clarifies, by an analysis of two-stage boundaries, that there is no single model of social and economic efficiency according to the type of financial entity in Europe. These findings contribute to the social cost paradox and shared value perspective, and more broadly to stakeholder theory. It is established that a tradeoff between economic and social efficiency is not needed. There are different behaviors in different European countries. Moreover, our results could lead to the development of social indicators of the sustainability aspects of organizations without resorting to traditional accounting.