APPLYING COBB-DOUGLAS LINEAR FUNCTION TO MEASURE THE EFFICIENCY OF VIETNAM COMMERCIAL BANKS

Abstract

This research is conducted to evaluate business performance of a banks, with non-parametric approach of Stochastic Frontier Analysis method (SFA) to build efficient frontier. This frontier is established by a function which describes relationship between banks’ input and banks’ business performance. That function is the linear Cobb-Douglas function used to evaluate banks business performance during 2009-2015, these are state-owned banks, private banks, data collector data to chéo, including 210 observers. The result shows that the banks with highest business performance are the ones with higher 90% efficiency. These banks are large in scale with total assets over 45 trillion and have been working for more than 10 years by now.