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GTAP Resource #3766

"Economy-wide impacts of liberalization in the Vietnamese banking sector"
by Dinh, Huong

The world economy was severely affected by the global financial crisis of 2008 and Viet Nam was no exception. In 2009, the global economy contracted by 1.1%, with advanced economies hit hardest and experiencing an average drop in output of approximately 3.3%, according to International Monetary Fund (IMF) (2010) data. In Viet Nam, the gross domestic product (GDP) growth rate declined from 8.5% in 2007 to 6.2% in 2008; in the trade deficit in 2008 reached US$ 18 billion, a figure equivalent to 21% of GDP, while inflation reached 26% (General Statistics Office, 2009).
The current global financial crisis has promoted a significant rethink of banking regulation in many parts of the world. In 2010, the Seoul G20 summit endorsed a new bank capital and liquidity regulatory framework devised by the Basel Committee on Banking Supervision, in order to strengthen the resilience of the global banking system. The crisis has further prompted a renewed look at the distinction between prudential regulation and trade barriers in banking services, casting some doubts on whether further trade reforms in the banking sector are necessary.
As in many other countries, scepticism towards further trade reforms in the banking sector runs rampant in Viet Nam. The Government of Viet Nam holds that the country has already opened up its banking market to foreign competition too much relative to other Asian countries. The Government thus argues that there is little room for, and likely few gains to be achieved from further trade reforms. Concern has also arisen among policymakers about the crowding-out effects of foreign banks on domestic operators. There is quite clearly ample room for research into the desirability of further trade reforms in Viet Nam’s banking sector.
In 2006, the State Bank of Viet Nam (SBV) increased the minimum charter capital requirement of dong (D) 3,000 billion applicable to banks as a way of restructuring the banking system. This requirement, on the one hand, h...

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: ADBI and ArTNET
Date: 2011
Created: Dinh, H. (3/15/2012)
Updated: (3/15/2012)
Visits: 648
- Labor market issues
- Asia (East)

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