The impact of non-traditional activities on the technical efficiency of commercial banks: Evidence from Vietnam

This study investigates the effect of non-traditional activities on the operational efficiency of Vietnamese commercial banks during the period 2016–2024. The data envelopment analysis (DEA) method is used to measure bank efficiency, while fixed effects, random effects, and system generalized method of moments (GMM) models are applied for estimation. The results indicate that non-traditional activities (NTAs) improve bank efficiency. In addition, the lagged value of bank efficiency and the ratio of loans to total assets have a positive influence on efficiency. In contrast, bank size and inflation reduce efficiency. The study does not find evidence of a relationship between return on assets, capital adequacy ratio, and economic growth rate with bank efficiency. These results provide useful insights for commercial banks in developing new non-traditional products and services to enhance operational efficiency.