Foreign banking penetration and Competition in the Vietnamese banking industry

Abstract

This study aims to examine the contribution of foreign bank presence to competition in the Vietnamese banking industry.
The econometric model with bank ownership interactive variables under Panzar- Rosse method are employed to assess
the level of competition among local and foreign banks in two time periods: the period of 1992- 2007; and the period
of 2008- 2013. The result indicates that the foreign banks behaved more competitively than the local banks, and their
penetration is therefore important in creating a contestable market.