The financial sustainability of Vietnamese higher education institutions: unveiling the hidden factors

Purpose Over several decades, the Vietnamese government has gradually reduced funding for public higher education and has implemented a cost-sharing system. As a result, Vietnamese universities have had to look for alternative sources of income. While there is a significant emphasis on the importance of revenue diversification in higher education in Vietnam, there is limited empirical data on financing for Vietnamese higher education. The purpose of this paper, therefore, is to estimate the degree of financial sustainability in Vietnamese universities. Design/methodology/approach The authors used the Hirschman–Herfindahl Index and multiple regression analysis to assess 134 Vietnamese universities’ financial sustainability between 2013 and 2020. Findings The results revealed that almost all universities in this study were unsustainable due to their weak financial diversity. The age, type of ownership, location, the ratio of lecturers with PhD degrees and land size can affect the financial diversification level of higher education institutions. Our study highlighted that public universities have better financial health than private universities; institutions in rural areas have higher financial diversification than in big cities. Originality/value Suggestions for policymakers and university leaders that may enhance financial sustainability include the adoption of tailored strategies based on the university’s characteristics and missions.