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http://dx.doi.org/10.13106/jafeb.2020.vol7.no10.087

Efficiency of Sterilization Policies by the State Bank of Vietnam  

HOANG, Hang Thi Thanh (Department of Postgraduate Education, Banking University of Ho Chi Minh City)
NGUYEN, Phung Thi Kim (Accounting and Auditing Faculty, Banking University of Ho Chi Minh City)
NGUYEN, Phuc Tran (Banking Faculty, Banking University of Ho Chi Minh City)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.10, 2020 , pp. 87-94 More about this Journal
Abstract
This study aims to evaluate the effectiveness of sterilization in Vietnam. We estimate a simultaneous equation by using Two-Stage least squares (2SLS) regression analysis. The time-series data was collected for the first quarter of 2004 to the fourth quarter of 2018. In particular, the effectiveness of sterilization is considered in terms of dollarized economy, since making the transition from a centrally planned to a market economy system, the Vietnamese economy has remained in a state of dollarization. In addition, we also assess whether the global financial crisis had an impact on the sterilization effectiveness of the State Bank of Vietnam (SBV). On the basis of the estimated sterilization and offset coefficients, our results suggest that the State Bank of Vietnam (SBV) has not been able to fully neutralize the impact on the domestic money supply when intervening in the foreign exchange market, and the capital inflows respond strongly to changes in domestic monetary conditions. The results also show that the global financial crisis has changed the effectiveness of these sterilization policies. An analysis of this study's empirical findings provides the opportunity to derive some recommendations that may assist in increasing the effectiveness of the State Bank of Vietnam's sterilization policies in the process of accumulating international reserves.
Keywords
Sterilization Efficiency; Sterilization Coefficient; Offset Coefficient; Global Financial Crisis; Dollarization;
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Times Cited By KSCI : 5  (Citation Analysis)
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