Evaluating Firm Performance of Vietnamese Banks with the Balanced Scorecard

Transcription

1 NATIONAL KAOHSIUNG UNIVERSITY OF APPLIED SCIENCE Evaluating Firm Performance of Vietnamese Banks with the Balanced Scorecard Student: Kim Phung Truong Advisors: Dr. George Yungchih Wang Dr. Chia - Nan Wang 14 June

2 Outline 1. Introduction 2. Literature Review 3. Methodology 4. Empirical 5. Conclusion 2

3 Introduction Research Motivation Vietnam banking branch is difficulties in liquidity and deadlock in the operation. Vietnamese banks are still using primitive performance evaluation systems such as annual, quarterly and monthly reports. The balanced scorecard (BSC) is an approach been applied at the big banks in Vietnam and is not known within the small banks in Vietnam. 3

4 Introduction Research Objective To determine which factors of BSC actually would affect Vietnamese banks. To test and generate model which is the best fit model used for the application and implementation BSC in Vietnamese banks. To propose potential solutions on enhancing efficiency of the implementation BSC in Vietnamese banks. 4

5 Methodology Research Framework Research Process EFA Reliability Analysis CFA Surveyed Data Customer SEM Firm Value (Tq) Observed Variable Observed Variable Actual Calculations Internal Process Learning And Growth Finance BALANCED SCORECARD (BSC) FIRM PERFORMANCE OF VIETNAM BANKS Earning Per Share (EPS) Stock Return (Ri) Observed Variable Actual Calculations 5

6 Methodology Research Hypothesis Customer H1 Firm Value (Tq) Internal Process Learning And Growth Finance BALANCED SCORECARD (BSC) H2 H3 Earning Per Share (EPS) Stock Return (Ri) FIRM PERFORMANCE OF VIETNAM BANKS H4 6

7 Methodology Measure Liquity ratio. Total asset Debt ratio. Net profit margin. Customer Market share. Customer retention rate. The rate of customers. Customer satisfaction. Customer profitability level. Financial Ability of employees. Organization information system Balanced Scorecard (BSC) Learning and growth Internal business process Improve the existing operators. Attract and retain the target customers. 7

8 Methodology Standardized Measure BSC Finance & Bank s Performance 1. Standardization Where, X i X Z : sample standard deviation. : (i=1=> n, n=31): sample size. : mean sample size. 2. Design the 5-level Likert measure ( X X ) ( n 1) i 0.8. > Z 5: Level 0.6. > Z 4: Level 0.4. > Z 3: Level 0.2. > Z 2: Level 0.2. Z 1: Level 8

9 Descriptive Statistics Mean Min Max Std. Deviation Customer (CUS) Internal Business Process (INT) Learning and Growth (LEA) Financial (FIN) Firm performance of Vietnamese banks (PER)

10 EFA Independent Variable - Customer Factor 1.1 Customer Profit (CUS.1) Factor 1.2 Available Product (CUS.2) Factor 1.3 Customer satisfaction (CUS.3) Factor 1.4 The rate of customers (CUS.4) KMO Rotation Sum of Squared Loadings % 10

11 EFA - Independent Variable Internal Business Process Factor 2.1 Factor 2.2 Internal Improvement (INT.1) Internal Strategy (INT.2) KMO Rotation Sum of Squared Loadings % 11

12 EFA - Independent Variable Learning and Growth Factor 3 Learning and Growth (LEA) KMO Rotation Sum of Squared Loadings % 12

13 EFA - Independent Variable Finance Factor 4.1 Factor 4.2 Finance indicators_1 Finance indicators_2 KMO Rotation Sum of Squared Loadings % 13

14 EFA - Dependent Variable Bank s Performance Factor 5 Bank Performance KMO Rotation Sum of Squared Loadings % 14

15 Reliability Statistics Reliability Analysis Independent Variable Rank the Importance of 8 Factors Rank # Factor Items Mean Min Max 1 FAC 3 Learning and Growth FAC 1.1 Customer Profit FAC 1.3 Customer satisfaction FAC 1.2 Available Product FAC 1.4 The rate of customers FAC 2.1 Internal Improvement FAC 4.1 Financial indications_ FAC 4.2 Financial indications_ FAC 2.2 Internal Strategy

16 Reliability Analysis Dependent Variable Item-Total Statistics Measure Measure Corrected Item- Squared Cronbach's Mean if Item Variance if Item Total Multiple Alpha if Item Deleted Deleted Correlation Correlation Deleted E E E Reliability Statistics Cronbach's Alpha.839 Cronbach's Alpha Based on Standardized Items.836 N of Items 3 16

17 CONFIRMATORY FACTOR ANALYSIS (CFA) 1. Measuring fit level of the model The Second CFA Standardized Result Chi-square χ² = (>0.05), with p-value = (<0.05). Chi-square/df = ( 3). GFI = ( 0.9). AGFI = ( 0.9). CFI = ( 0.9). TLI = ( 0.9). RMSEA = ( 0.05). 17

18 CONFIRMATORY FACTOR ANALYSIS (CFA) 3. Onedimension --ality 2. Convergent validity 4. Discriminant validity Discriminant validity Hypothesis Testing: Hs 0 : The correlation coefficient of concepts is equal to 1 (= 1). 5. Reliability Hs 1 : The correlation coefficient of the concept is different from 1 ( 1). 18

19 STRUCTURAL EQUATION MODELING (SEM 1) Testing Theoretical Model SEM 1 Measuring fit level of the model Chi-square χ² = (>0.05), with p-value = Chi-square/df = ( 3). GFI = ( 0.9). AGFI = ( 0.9). CFI ( 0.9), TLI = ( 0.9). RMSEA = ( = 0.05). 19

20 STRUCTURAL EQUATION MODELING (SEM 1) Testing Theoretical Model SEM 1 Regression Weights of SEM 1 final time Estimate S.E. C.R. P Label E.3 <--- CUS *** par_67 E.3 <--- CUS par_68 E.3 <--- INT par_69 E.3 <--- FIN par_71 E.3 <--- FIN *** par_72 E.2 <--- FIN par_70 E.2 <--- CUS *** par_73 E.2 <--- CUS par_74 E.2 <--- INT par_75 E.2 <--- FIN *** par_77 E.1 <--- FIN par_76 E.1 <--- FIN par_78 E.1 <--- CUS par_79 20

21 STRUCTURAL EQUATION MODELING (SEM 1) Testing Hypothesis H1, H2, H3 Standardized Regression Weights of SEM 1 Estimate E.3 <--- CUS1.907 E.3 <--- CUS E.3 <--- INT2.285 E.3 <--- FIN E.3 <--- FIN E.2 <--- INT2.343 E.2 <--- FIN E.2 <--- FIN E.2 <--- CUS1.867 Squared Multiple Correlations of SEM 1 Estimate E E E E.2 <--- CUS E.1 <--- FIN E.1 <--- FIN2.623 E.1 <--- CUS

22 STRUCTURAL EQUATION MODELING (SEM 2) Testing Theoretical Model SEM 2 Measuring fit level of the model Chi-square χ² = ( >0.05), with p-value = Chi-square/df = ( 3) GFI = ( 0.9) AGFI = ( 0.9) CFI ( 0.9) TLI = ( 0.9) RMSEA = ( = 0.05). 22

23 STRUCTURAL EQUATION MODELING (SEM 2) Testing Theoretical Model SEM 2 Regression Weights of SEM 2 final time Estimate S.E. C.R. P Label PER <--- CUS *** par_40 PER <--- CUS par_41 PER <--- INT par_42 PER <--- LEA par_43 PER <--- FIN par_44 PER <--- FIN *** par_45 23

24 STRUCTURAL EQUATION MODELING (SEM 2) Testing Hypothesis H 4 Standardized Regression Weights of SEM 2 Estimate PER <--- CUS1.861 PER <--- CUS2.819 PER <--- LEA.147 Squared Multiple Correlations of SEM 1 Estimate PER.602 PER <--- FIN1.755 PER <--- FIN2.835 PER <--- INT

25 Conclusion Main findings 1 CFA show that there are significant relationships between four dimensions of BSC with firm performance of Vietnamese banks. 2 Model SEM 2 which is the best fit model used for the application and implementation BSC in Vietnamese banks. 25

26 Conclusion Managerial implications 1 In the customer dimension: increase investment activities of the mutual fund, increase the size of the stock market in Vietnam. 2 Internal business process dimension: enhancing deployment the product Homebanking to help banks improve service quality and operation efficiency. Banks should focus on this issue because the main building is the security technology. 26

27 Conclusion Limitations and Future Research Limitations 1 2 Sample size is small. Assessment to the true database is limited. Future Research 1 Compare ability of financial performance between Vietnamese and Taiwan banking industry. 2 Further research will look for approaches to incorporate the changing composition of the BSC and observe characteristics over a longer period. 27

28 APPRECIATION WITH GREAT HONORS TO Professor: 王雍智 Professor: 王嘉男 Professor: 鄭義 Professor: 林士貴 Thank you very much 28