Vol.26, No.5E (E.B)

The development of financial systems of ASEAN-5 and Vietnam: A comparative analysis

This paper looks at the development of the financial systems of ASEAN-5 countries and Vietnam. By making a comparison between factors that foster the financial development of ASEAN-5 and Vietnam, it suggests that both the two sides share common characteristics including: financial repression, bank based development, accelerating liberalization of the financial sector, capital movement, inefficiency, due to lack of competition, effective governance, and managerial freedom. The health of financial system of the ASEAN-5 has improved substantially during the period post 1997-98, with increase in foreign ownership, movement into business line, suitable adjustment for financial deepening and broadening. On the Vietnamese side, it shows rapid changes in the financial sectors with existence of capital market and financial resources as well as risks, resulting from the reforms and international integration. Contrasting the financial development of the two sides, this paper finds that ASEAN-5 is implementing a more stable strategies and moving towards a more balanced financial structure, while Vietnam is taking step by step restructuring and developing its out of date banking sector; as well as supporting for the stock and bond markets. For both Vietnam and ASEAN-5, the banking system and capital market have a large room for further development..

Nguyen Phu Ha

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