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http://dx.doi.org/10.13106/jafeb.2021.vol8.no8.0325

The Effectiveness of Macroprudential Policy on Credit Growth at Bank-Level Data in Vietnam  

NGUYEN, Hau Trung (Banking Science and Technology Management Division, Banking Strategy Institute, State Bank of Vietnam)
PHAM, Anh Thi Hoang (Research Institute for Banking, Banking Academy)
DANG, Thuy T. (International Relation and Integration Studies, Institute for Indian and Southwest Asian Studies, Vietnam Academy of Social Sciences)
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.8, 2021 , pp. 325-334 More about this Journal
Abstract
The study investigates the effectiveness of the macroprudential policy on credit growth in Vietnam. The authors use the logic of the transmission mechanism of macroprudential policy on credit growth. Research variables include economic growth, inflation, interest rate, and quarterly bank-level data from 28 commercial banks in Vietnam during 2011-2018. The results reveal that: (i) GDP growth had a positive impact on credit growth of small banks but had no impact on large banks, (ii) Domestic Systemically Important Banks (D-SIBs) and small banks respond differently to macroprudential measures of imposing different credit growth targets for different bank groups, (iii) Restrictions on foreign currency loans are found to be effective in curbing credit growth for the full sample and small banks, (iv) Inflation and economic cycle have significantly impacted credit growth at bank-level in Vietnam and (v) Interestingly, a significant positive relationship between interest rates and credit growth is found for the full sample and D-SIBs in Vietnam. The findings suggest that a stable macroeconomic environment should be good conditions for financial stability, and monetary authority should pay more attention to small banks' behaviors than D-SIBs behavior, toward such "administration" tools since small banks tend to prefer "breaking the rules" to make profits.
Keywords
Macroprudential Policy; Credit Growth; Transmission Mechanism; Bank-Level Data; Vietnam;
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