Repression of the Banking Sector in the Transition to a Market-based Economy: The Case of Vietnam
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One of the characteristics of Vietnam’s transition from a planned to a market-based economy is that the Communist party-led government directed the process. The government demonstrated leadership in implementing a “shock therapy” stabilization program in 1989–91, which comprised price liberalization and the abolition of central planning. The stabilization program provided the basis for subsequent economic growth.1 Real GDP recorded an average annual growth rate of 7.3 per cent for the period between 1989 and 2003.2 In terms of the banking sector, the stabilized macroeconomic environment gave impetus to savings mobilization. The deposit-to-GDP ratio has tripled to over 50 per cent in 15 years in the process of transformation of a mono-bank system to a two-tier banking system.
KeywordsCentral Bank Banking System Banking Sector Lending Rate Credit Supply
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