ဖော်ပြချက်/အကြောင်းအရာ:
ABSTRACT"
"This study focuses on financial sector reform-it?s impacts on banking sector in CLMV
during 1990s. The objective of this study are (a) to provide an overview of the major financial
reform and the impacts of interest rate deregulation on financial sector development in the
CLMV countries; (b) to examine fiscal imbalances financed by monetary expansion that
increases inflation and thus represses the banking system; (c) to evaluate the impact of high
reserve requirements on banking sector; and (d) to analyze the effect of capital flight and
dollarization on banking sector.
One of the major financial reforms in CLMV is interest rate liberalization together
with controlling inflation, this results in a positive real interest rate that contributes to
financial deepening. Financial depth, as measured by broad money to Gross Domestic Product
appears to increase in these economies, especially in Cambodia, Laos, and Viet Nam. The
growth of broad money was mainly contributed by foreign currency deposit particularly in
Cambodia and Laos. Viet Nam, however, local currency deposit was the main contributor of
growth. While in Myanmar, the growth of broad money started to decline as a result of real
ii
negative interest rate. In some of CLMV, banks? lending portfolios have been weakening
because of direct lending to the priority sector. Apart from that the major factor that weakens
the financial intermediation is the inflation acceleration particularly in Laos and Myanmar.
Inflation is a consequence of budget deficit financed by borrowing from financial system
since these countries are at the early stage of financial market development.
Laos and Myanmar pursued credit expansionary policy particularly providing loans to
public sector that often results in increased fiscal deficit. By expanding public sector
borrowing, government invested in the long term infrastructure projects and provides the
subsidized loans to SOEs or SEEs who exhibited weak financial performance and loss making.
The greater amount of public sector loans, the more non performing loans occur in the
banking system, eventually discouraging financial intermediation.
Another factor discouraging the financial intermediation is high reserve requirements
in Cambodia, Laos, and Myanmar. The high reserve requirements imposed by central bank
raised the margin between lending rate and deposit rate. As a result, this has reduced the
amount of loanable fund for the expansion of productive investment projects, creating
hindrance to the financial intermediation functions.
Financial liberalization together with inflationary finance induce capital flight,
dollarization and misallocation of resources. In the situation, when a country has
underdeveloped financial market, there could be capital flight or dollarization; as a result, this
leads to financial disintermediation.
The banking system in Myanmar is not allowed to offer foreign currency deposits; the
response is increase in foreign currency holding outside banking system or holding durable
assets. Myanmar maintains interest rate ceiling lower than the market determined rate and the
overvaluation of fixed exchange rate that encourages the capital flight
To avoid capital flight, the governments allow commercial banks to offer foreign
currency deposits in Cambodia, Laos, and Viet Nam. The result is that foreign currency
deposits grow rapidly and there has limited opportunities for lending in foreign currency. The
option available for banks is to transfer the excessive fund in foreign currency to deposit in
foreign banks and this lead to a so called capital flight and final outcome is hindrance to the
financial depth."
ရင်းမြစ်:
Graduate School for International Development and Cooperation Hiroshima University
Date of Publication:
2005-09-00
Date of entry:
2010-01-01
Grouping:
- Individual Documents
အကြောင်းအရာ/အမျိုးအစား:
Language:
English