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Banking

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Title: Central Bank will not return to old ways: senior official
Date of publication: 21 October 2015
Description/subject: "Amid widespread anxiety over the impact of the Central Bank’s decision to revoke thousands of US dollar accepter and holder licences, a senior official has promised authorities have no plans to return to old ways..."
Author/creator: Aye Thidar Kyaw
Language: English
Source/publisher: "Myanmar Times"
Format/size: html
Date of entry/update: 22 October 2015


Title: Hundreds of forex licences revoked
Date of publication: 19 October 2015
Description/subject: "The Central Bank of Myanmar (CBM) has revoked foreign exchange licences held by hotels, airlines and thousands of other businesses, in a bid to counter dollarisation..."
Author/creator: Aye Thidar Kyaw
Language: English
Source/publisher: "Myanmar Times"
Format/size: html
Date of entry/update: 22 October 2015


Title: FINANCIAL REFORM: IT’S IMPACTS ON BANKING SECTOR IN CAMBODIA, LAOS, MYANMAR AND VIETNAM
Date of publication: September 2005
Description/subject: 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."
Author/creator: TIN TIN HTWE
Language: English
Source/publisher: Graduate School for International Development and Cooperation Hiroshima University
Format/size: pdf (531K)
Date of entry/update: 01 January 2010


Title: Burma's Banking Crisis: A Commentary
Date of publication: 06 March 2003
Description/subject: "... Burma is currently undergoing one of its periodic monetary and financial crises. Unusually, however, this time the crisis is not a characteristic de-monetisation episode, but a failure of confidence in the country's nascent private banking sector. In this sense the current crisis is probably less immediately destructive of the 'wealth' of ordinary Burmese than previous dramas (as shall be examined below), but its longer-term damage to Burma's economy and to key institutions is likely to be severe indeed. Trust is the foundation of banking and the key ingredient of a country's social capital. There must be little of this (already scarce) commodity in Burma today. The following is an attempt to make sense of some of the developments that have been taking place in Burma's banking sector in recent weeks. It suffers from the usual information difficulties that come with attempting real-time commentary on the opaque world of Burma's political economy. It is hoped, nevertheless, that it might prove useful in at least shining a dim light into some very dark corners. It is not a comprehensive account of individual events either, but it arguably provides a sufficient outline upon which to begin a process of analysis. Extensive use is made throughout of a more detailed examination of the structure of Burma's banking system contained in Turnell (2002). We have made wide-spread use of many other sources, where possible indicated below. Finally, comments and suggestions would be greatly welcomed.
Author/creator: Sean Turnell and Alison Vicary
Language: English
Source/publisher: Burma Economic Watch
Format/size: html (81K)
Date of entry/update: 03 June 2003


Title: On Shaky Ground
Date of publication: March 2003
Description/subject: How much further will Burma’s banks slide?...After the crash of more than a dozen finance houses that funded outside business ventures with their depositors’ money, anxious bank customers rushed to withdraw their savings, thus precipitating a rundown on reserves of the national currency, the kyat. Other banks in Burma face similar problems. At the end of last year, top bankers were forecasting a boom for 2003. Last month, however, predictions were rife that the collapse of financial houses would drag down all the 20 banks with 350 branches nationwide..."
Author/creator: Naw Seng
Language: English
Source/publisher: "The Irrawaddy" Vol. 11, No. 2
Format/size: html
Date of entry/update: 03 June 2003


Title: Bank Crisis Reeks of a Ponzi Scheme
Date of publication: 26 February 2003
Description/subject: February 26, 2003—"Burma's banks are more like a dubious "Ponzi" or pyramid scheme than well-run commercial banks. Between 1962 and 1988, the banks in Burma were all state-owned, and lent primarily to state owned enterprises. After 1988, the declaration of a so-called open market economy made way for private commercial banks, but they were never built on strong capital..."
Author/creator: Kyi May Kaung
Language: English
Source/publisher: "The Irrawaddy" Commentary Archive
Format/size: html (11K)
Date of entry/update: 03 June 2003


Title: Reforming the Banking System in Burma: A Survey of the Problems and Possibilities - TAN
Date of publication: November 2002
Description/subject: "...The transformation of Burma into a fully institutionalised liberal democracy based on a market economy will be a multi-faceted process. One aspect of this must be, however, the creation of a properly functioning financial system. Financial institutions are integral to economic development. In a market economy they provide the central coordinating mechanism through which resources are allocated. At best, they do this in ways that maximise the wealth and welfare of their respective national economies. The foundations of a proper functioning financial system are transparency, accountability and the effective transmission of market signals. Burma’s existing financial system, unfortunately, possesses few of these virtues. Worse, its principal financial institutions may be little more than facades for the activity of criminals and a narco-state. Reforming Burma’s financial system, in particular the banks that make up its core, will require the privatisation of its state banks, the legitimisation of its existing private banks and the opening up of the sector to foreign competitors. Before these measures can be undertaken, however, fundamental institutional reform will be necessary. Burma must become an economy and a society ruled by law and not the whim of generals. The Burmese people must have rights to property in order to best liberate their latent skills and energy. Financial regulation must adopt practices that have been demonstrated to work elsewhere. Macroeconomic policy must leave the irrational world and enter that which reason and history teaches us can achieve all that governments are able. Burma’s political economy, in short, awaits its transformation..."
Author/creator: Sean Turnell
Language: English, Burmese
Source/publisher: The Burma Fund (Technical Advisory Network of Burma) WP07
Format/size: pdf (287K)
Date of entry/update: 10 June 2007


Title: Reforming the Banking System in Burma: A Survey of the Problems and Possibilities
Date of publication: 25 September 2002
Description/subject: Sean Turnell, Economics Department, Macquarie University, Sydney, Australia. Abstract: "A country's financial system plays a critical role in its economic development. It is the vehicle through which the means of exchange are created, resources are mobilised and allocated, risks are managed, government spending is financed, foreign capital is accessed, and it is via financial institutions that individuals can protect themselves against economic fluctuations. Notwithstanding this essential role, Burma has not had a properly functioning financial system for four decades. The present system, an unstable mix of monolithic state-owned institutions and a cohort of new private banks of dubious legitimacy, is a serious brake on Burma's economy. This paper examines the role financial institutions can play in a country's development, explores how Burma's current system falls far short of this ideal and broadly outlines how it might be reformed. It argues the case for the standard remedies professed by economists of liberalisation, stabilisation and privatisation but, critically, suggests that these must be preceded by more fundamental reforms that create the legal, regulatory and other infrastructure that are the prerequisites of a modern, and efficient, financial system. ..". Keywords: Burma; Banks; Regulation; Supervision; Financial Liberalisation; Economic Development. Paper presented to the 1st Collaborative International Conference of the Burma Studies Group, Gothenburg, Sweden, 21-25 September 2002
Author/creator: Sean Turnell
Language: English
Format/size: pdf (239K), html (380K), Word (187K)
Alternate URLs: http://www.ibiblio.org/obl/docs/Turnell_bankreform.doc
http://www.ibiblio.org/obl/docs/Turnell_bankreform.htm
Date of entry/update: 03 June 2003


Title: Banking in Burma: New Frontiers, or a Barren Wasteland?
Date of publication: July 2001
Description/subject: "A countrys financial system provides its means of exchange and is the mechanism through which its resources are mobilised and allocated. The financial system is the arena in which economic risk can be managed, government debt can be financed, foreign capital can be accessed and managed, and it is the vehicle through which monetary policy can be implemented. According to Larry Summers, the former Secretary of the US Treasury, a countrys financial system provides the wheels for its development...The foundations of a proper functioning financial system are transparency, accountability, governance and the effective transmission of market signals. Burmas financial system possesses few of these virtues. Burmas banks do not fulfil the role allotted to such institutions in allocating resources in ways beyond the whims of the military. Worse, they may be little more than facades for the activity of criminals and a narco-state. Unfortunately the history of financial sector reform in Burma does not lend optimism to the hope that this might change without more fundamental changes in the country. Like so much else in Burma, the emergence of a viable banking system must await the political reform that is so long overdue." Extra keywords: money laundering, joint venture regulation, exchange controls.
Author/creator: Sean Turnell
Language: English
Source/publisher: Burma Economic Watch
Format/size: html (105k)
Date of entry/update: 03 June 2003


Title: Above it all
Date of publication: February 2001
Description/subject: "Burmese banks are thriving, even as the country’s economy suffers its worst slump in years. Their secret, say businessmen in the know, is the nexus of generals and drug lords..."
Author/creator: Maung Maung Oo
Language: English
Source/publisher: "The Irrawaddy", Vol. 9, No. 2
Date of entry/update: 03 June 2003