Purpose – Management practices and competition levels have been shown as important factors affecting the
performance of enterprises that do not include banks. The paper, thus, aims to measure management practices
and to study the effect of management quality and competition level on the performances of the first-level
branch of commercial banks in the context of the Viet Nam banking system.
Design/methodology/approach – The study employed the approach of Bloom and Van Reneen (2007) to
quantify management practices of the commercial banks. The level of competition was measured by the
number of competitors suggested by Nickell (1996) and the index suggested by Boone (2008). Finally, the effects
of management practices and competition level on the bank performances were jointly estimated through a
Cobb–Douglas production function, similar to the one used by Bloom et al. (2014).
Findings – The results show that the management practices score is, on average, above the average. While
the management practices are found to positively correlate with profits, the competition level is found to
significantly reduce bank profits.
Research limitations/implications – Cross-sectional data limit the findings of the paper to a point of time.
In the future, studies with panel data are desirable.
Practical implications – The findings of the study help bank managers to make more informed decisions
about management practices. Any policy promoting new entrants to the banking market should be carefully
considered.
Originality/value – The paper is the first to measure the management practices of commercial banks and to
explore the impacts of management quality and competition level on bank performances.