This paper applied a modified DEA window analysis to analyze the performance changes through time of the Vietnamese banking system in the 1990-2010 periods. The research suggests that this performance is decreasing through the time as the size of the banking sector increases; financial market is more liberate, and when the World and regional economies are problematic. | Journal of Applied Finance & Banking, , , 2012, 289-312 ISSN: 1792-6580 (print version), 1792-6599 (online) International Scientific Press, 2012 Measuring the Performance of the Banking System Case of Vietnam (1990-2010) Dang-Thanh Ngo1 Abstract Banking is the core of the financial system which has important role in attracting deposits to provide credits to borrowers, services to customers and booting the economic development. This paper applied a modified DEA window analysis to analyze the performance changes through time of the Vietnamese banking system in the 1990-2010 periods. The research suggests that this performance is decreasing through the time as the size of the banking sector increases; financial market is more liberate, and when the World and regional economies are problematic. While the banking system is running at two-third of its capacity, it has limited contribution to the economy. Therefore, continuing to develop and restructuring the banking system in Vietnam is important now and then. Using tighten monetary and/or loosen fiscal policy can be seen as a solution for improving the performance of the Vietnamese banking system. 1 VNU University of Economics and Business, Vietnam; Massey University, New Zealand e-mail: ndthanhf@ Article Info: Received : February 8, 2012. Revised : March 10, 2012 Published online : April 15, 2012 290 Measuring performance of the banking system: Case of Vietnam (1990-2010) JEL classification numbers: E50, G21, G28 Keywords: data envelopment analysis, banking system, performance, Vietnam 1 Introduction From the financial liberalization in the early of the nineteen nineties, the banking system in Vietnam particularly and the financial system generally has achieved a lot of improvements (Ngo, 2004). Over these last twenty years, the banking system has been transferring from a one-tier system into a two-tier system which allowed all participants to compete fairly and effectively. More banks .
