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    The Basel Capital Requirement, Lending Interest Rate, and Aggregate Economic Growth: An Empirical Study of Viet Nam

    Phi, Nguyet Thi Minh; Hoang, Hanh Thi Hong; Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki | January 2019
    Abstract
    In recent years, the Vietnamese economy has shown signs of financial distress, and especially small banks have experienced serious liquidity and solvency problems. Based on the new policy of the State Bank of Vietnam, in order to ensure safe and effective banking operations, the Basel II accord will be widely applied to the whole banking system by 2018. This paper investigates the effects of the Basel II capital requirement implementation in Viet Nam on the bank lending rate and national output. The paper provides a theoretical framework as well as empirical model by developing a Vector Error Correction Model (VECM) over the period 2018 to 2016 by employing three groups of indicators (macroeconomics, banking, and monetary). The main finding of the paper is that at the bank level, a tightening of regulatory capital requirements does not induce a higher lending rate in the long run. Also, changes in micro-prudential capital requirements on banks have statistically significant spillovers on the GDP growth rate in the short term; yet, their effects significantly lessen over a longer period.
    Citation
    Phi, Nguyet Thi Minh; Hoang, Hanh Thi Hong; Taghizadeh-Hesary, Farhad; Yoshino, Naoyuki. 2019. The Basel Capital Requirement, Lending Interest Rate, and Aggregate Economic Growth: An Empirical Study of Viet Nam. © Asian Development Bank Institute. http://hdl.handle.net/11540/9620.
    Keywords
    Development
    Finance
    Development Challenges
    Development Issues
    Development Problems
    Microenterprises Finance
    Commercial Finance Companies
    Enterprise Financing
    Financial Analysis
    Banking Finance And Investment
    SMEs
    Rural planning
    Economic development
    Economic indicators
    Standard of living
    Development projects
    Development policy
    Housing projects
    Development models
    Social reform
    Urban planning
    Public Borrowing
    Credit Policy
    Banks
    Small Business Finance
    Capital Market
    ADB
    Project finance
    Development plans
    Strategic planning
    Business Financing
    Investment Requirements
    Insurance Companies
    International Monetary Relations
    International Financial Market
    Exchange Rate
    Cultural Development
    Development Economics
    Development Issues
    Financial Sector Development
    Infrastructure Development
    Urban Development Finance
    Financing
    Financial System
    Financial Sector Reform
    Financial Institution
    Bank Financing
    Insurers
    Insurance stocks
    Insurance holding companies
    Insurance carriers
    Insurance agencies
    Business subsidies
    Investment companies
    International banks and banking
    Stock exchanges
    Grants
    Loans
    Interest Rates
    Real estate development
    Housing development
    Community banks
    Mortgage banks
    Housing policy
    Tax administration and procedure
    Real property and taxation
    Property tax
    Credit control
    Banks and banking
    Title companies
    Tax deductions
    Accounts
    Savings
    Inheritance and transfer tax
    Trusts and trustees
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/9620
    Metadata
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    Author
    Phi, Nguyet Thi Minh
    Hoang, Hanh Thi Hong
    Taghizadeh-Hesary, Farhad
    Yoshino, Naoyuki
    Theme
    Development
    Finance
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise