Financial Structure and Economic Growth – Case of Vietnam

Posted: 18 Aug 2014 Last revised: 7 Dec 2014

See all articles by Huan Nguyen

Huan Nguyen

Ho Chi Minh City University of Economics and Finance - Faculty of Banking

Duy Pham

Ho Chi Minh City University of Economics and Finance - Faculty of Banking

Date Written: August 18, 2014

Abstract

This paper estimates the actual role of the financial structure for economic growth in Vietnam by using Granger causality test and VAR Cholesky technique. The results show that there is almost no evidence on the relationship between stock market development and economic growth. Instead, Vietnam's financial structure mainly bases on the banking system, and major source of capital in the economy flows through this channel with total outstanding bank loans equivalent to 100% of the GDP. Meanwhile Stock market does not perform well in mobilizing medium and long-term capital, with the market capitalization only about 30% of the GDP of the economy.

Keywords: financial structure, economic growth, stock market, emerging market, Vietnam, bank based

JEL Classification: E44, N25, O16

Suggested Citation

Nguyen, Huan and Pham, Duy, Financial Structure and Economic Growth – Case of Vietnam (August 18, 2014). Available at SSRN: https://ssrn.com/abstract=2482224 or http://dx.doi.org/10.2139/ssrn.2482224

Huan Nguyen

Ho Chi Minh City University of Economics and Finance - Faculty of Banking ( email )

Ho Chi Minh City
Vietnam

Duy Pham (Contact Author)

Ho Chi Minh City University of Economics and Finance - Faculty of Banking ( email )

Ho Chi Minh City
Vietnam

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