TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.TÁC ĐỘNG CỦA TÍN DỤNG NGÂN HÀNG TỚI TĂNG TRƯỞNG KINH TẾ TẠI VIỆT NAM.
MINISTRY OF EDUCATION AND TRAINING THE STATE BANK OF VIETNAM BANKING UNIVERSITY OF HO CHI MINH CITY DINH VAN HOAN THE IMPACT OF BANK CREDIT ON ECONOMIC GROWTH IN VIETNAM SUMMARY OF THESIS DOCTOR OF ECONOMICS Major: Finance - Banking Code: 9.34.02.01 Science instructors: Dr Nguyen Hoang Vinh Loc Associate Prof Dr Ha Thi Thieu Dao Ho Chi Minh City - 2022 SUMMARY The thesis aims to clarify the impact of bank credit (BC) on the economic growth (EG) in Vietnam, and at the same time discuss the research results with the reality of the economy, thereby making recommendations to improve the role of this capital flow for EG in Vietnam The general assessment approach, considering the impact of BC on EG along with macro factors related to material capital, deep access from assessing the impact according to the sector credit structure and clarifying the zoning impact on the economic via the credit/GDP ratio threshold Firstly, the author analyzes the practical context of macroeconomic conditions in the country, which focuses on bank credit growth (BCR) and gross domestic product growth (GDP) in the period of 2004-2020 On the basis of the practical context, the theoretical basis of the impact of BC on EG, the theory of the threshold of BCR as well as a summary of research related, the thesis raises the research gap and builds three quantitative models to assess the impact of BC on EG in Vietnam including: Impact assessment model with macro variables related to material capital, impact assessment model according to sector credit structure and zoning model impact according to credit/GDP ratio threshold Secondly, the results of the study were discussed and showed that BC has a positive impact on the GDP in the long term and there exists a two-way causal relationship between GDP growth and BCR in Vietnam However, the results of the assessment through the sector credit structure indicated that the impact of BC capital flows about sector group is different on GDP In addition, the difference in the three regression slopes in the estimated results corresponding to the three impact zones according to the credit/GDP ratio threshold, which make it clear impact of BC on GDP in Vietnam is not completely linear but appears transition point, the point at which the magnitude of the impact of BC on GDP changes from time to time Thirdly, the research results of three quantitative models make basis for the thesis to make recommendations to improve the role of bank credit inflows in promoting economic growth, propose to contribute to bringing the credit structure conform with the economic shifting structure and solutions to control the credit/GDP ratio in Vietnam In addition, based on the research results, the author also gives some recommendations to the State Bank to improve efficiency in management, monitoring credit activities and solutions, recommendations to improve the effect of the control variables in the model, contributing to promoting sustainable EG CHAPTER INTRODUCTION 1.1 RESEARCH REASON Economic growth (EG) in Vietnam was heavily influenced after the 1997 Asian currency crisis as well as the 2007-2008 global financial crisis (Goldstein Xie, 2009) In the period 2004-2020, with the flexible operating policies of the management agencies, Vietnam's economy has prospered, gross domestic product (GDP) rate increased continuously from 4.8% in 1999 to 8.5% in 2007, the highest since 1997 and for the whole period 2004-2020 Along with the growth rate, the quality of growth gradually improved, The contribution of industry - construction and services sectors to GDP is over 40% in the period 2004-2020, the agriculture, forestry and fishery sector accounts for a lower proportion, but tends to shift to green and high tech agriculture that produces high value added products According to many assessments of domestic and international economic experts, Vietnam's growth results are concentrated in breadth, but not yet have the strength to growth in depth CIEM (2012) assessments of economic growth in Vietnam is mainly based on breadth, not yet ensuring the rationality and efficiency of the use of growth factors Detail: (i) growth depends more on capital growth; (ii) macroeconomic stability is uncertain; (iii) low investment efficiency; (iv) low labor productivity and slow growth; (v) national competition is slow to improve; (vi) the objectives of institutional reform have not been given due attention Vietnam's financial system can be considered large for low middle income developed economies in terms of asset size, in which the majority of asset value belongs to the banking sector (IMF, 2017) The credit/GDP ratio is high (over 60%) and even exceeds 100% of GDP in the period 2014–2020 Bank credit (BC) structure focuses the most on industry and construction in the range of 35%-40%, followed by other service activities accounting for 25%-30% of the total BC balance, transportation, commerce and telecommunications with the proportion from 15% to 20%, BC for agriculture, forestry and fishery activities has the lowest proportion ranging from 8% to 10% Bank credit growth (BCR) fluctuates continuously in the period 2004-2020, on the one hand, this is a channel to transmit monetary policy to the economy quickly and effectively, helping to stabilize the macro-economy in the face of fluctuations on the world economic situation, On the other hand, it is both flexible in providing capital for production activities and is an effective tool to regulate the amount of money in the economy during the period of growth support packages was deployed after the 2007-2008 financial crisis But the capital needs of the production areas are limited and depend on the efficiency of the enterprises themselves A high credit to GDP ratio can be a manifestation of capital flowing into speculative activities, non-productive sectors such as securities and real estate, which affects the efficiency of bank credit as well as business activities of the banking system, thereby negatively affecting the development of the economy The positive impact of BC on EG has long been proven by researchers One of the first economist Schumpeter (1911) believed that BC has essential role in promoting EG through financial activities for investment and production Goldsmith (1969) argues that financial intermediation (including the banking system, especially the BC channel) improves efficiency savings allocation for investments, increases the production capacity of economy and market liquidity The author assumes that EG is positively related to the size of the financial system Not only that, the BCR is also a predictor of the currency crisis (Kaminsky, and Reinhart, 1999; Schularick, and Taylor, 2012) Countries with developed financial systems promote faster, higher economic growth, and barter greater volatility in crises (Ranciere et al, 2008) BC flows are effective when disbursed for the right purposes, responsing enough capital for production and business activities and increasing gross domestic product The excessive increase in credit inflows into the economy while the borrowers absorption is limited, which is a warning signal of the risk of rising inflation, asset price bubbles, potential increase in bad debts, threaten the stability of the financial system Excessive BCR, or hiding by circumventing lending regulations, asset appraisal, bank credit capital flows into non productive activities increases risks to the banking system, resulting in negative impacts on EG, especially in countries with double digit inflation or periods of economics crisis (Rousseau and Wachtel, 2002; Gennaioli et al, 2010) Input capital is an important factor for the development of the economies of countries in the world in general and in Vietnam in particular, which is clearly reflected in the theories and models of economic growth Capital is divided into physical capital and human capital, in which physical capital includes: machinery, equipment, investment capital for infrastructure and response the needs of production and business activities; human capital includes: knowledge, talent, skills, professional competence, experience, intelligence, motivation, intellectual property Endogenous economic growth model which focuses on the source of EG and the object of investment, in other words, to achieve the goal of sustainable economic growth, it is necessary to invest in physical capital (includes ivestment in human resource training and knowledge), emergence premise create foundation for the of scientific and technological advances, improving labor productivity and contributing to EG in the long term (Romer, 1990; Mankiw et al, 1992; Funke and Strulik, 2000; Do Van Duc, 2018) Research on the impact of BC on EG has received much attention from both domestic and foreign authors Studies often approach assessment in two directions: (i) approach to assess the impact of BC on EG through its integration into the impact model of the financial system, including BC and stock market; (ii) focus on analyzing the impact of BC on the economy, in which the credit variable includes the total size of credit outstanding or assessing the impact of BC by each classification such as credit corporate, private credit, credit by economic sector, etc to EG In Vietnam, the approach is mainly through impact assessment along with macro variables, the approach from the monetary policy implementation channel, determining the appropriate credit/GDP threshold is mostly, the approach through the credit structure of the industry is still small To solve this problem, the research direction of the study not only evaluates the impact of BC on EG and macro factors related to physical capital (investment capital), determine the relationship between BCR, EG and clarify the response of EG to the BCR shock during the period of economic volatility, but also approach a deeper assessment the impact of BC on EG according to the credit structure of the industry, determining the zoning of the impact of BC on EG according to the threshold of the credit/GDP ratio In other words, the problem which posed in assessing overview the impact of BC on EG, thereby making recommendations and policy implications to improve the of BC capital flow role, propose to contribute to bringing the credit structure conform with the economic shifting structure and solutions to control the credit/GDP ratio in Vietnam is necessary 1.2 RESEARCH OBJECTIVES AND QUESTIONS The overall objective of this study is impact of BC on EG in Vietnam clearly and at the same time discuss the research results with the reality of the economy, thereby making recommendations to improve the role of capital allocation for production and business activities in line with the economic transition, promoting the strengths of the bank credit channel in implementing the monetary policy, control domestic inflation, measures to limit the flow of credit capital into non-production activities, speculation At the same time, based on the results of impact zoning according to the threshold of credit / GDP ratio, propose measures to control this ratio in Vietnam Specific objectives to be achieved in the study include: - Assessing the impact and extent of the impact of BC on EG in Vietnam in the period 2004-2020 - Clarifying the impact of bank credit structure by industry on economic growth in Vietnam - Examining the variation of the impact of BC on EG in Vietnam according to the threshold of credit/GDP ratio Corresponding to the specific research objectives, the research questions are posed as follows: - What is the impact coefficient of credit growth on economic growth in Vietnam in the short and long term? - What is the trend of interaction between credit growth and economic growth in Vietnam? - How does the structure of bank credit by economic sector affect economic growth in Vietnam? - Is there an impact zoning according to the credit/GDP ratio threshold in Vietnam? 1.3 SUBJECT AND SCOPE OF RESEARCH Subject: The impact of bank credit on economic growth Scope: The scope of the study is determined to be all banks in the system of credit institutions in Vietnam Time: period 2004-2020, which selected is accordance with the impact assessment objective, considering the impact zoning according to the threshold of the credit/GDP ratio in the period of economic fluctuations 1.4 RESEARCH METHOD Firstly, for the quantitative method, the author chooses the VECM model, on the one hand, comprehensively assesses the impact of BC on EG in Vietnam in the period 2004-2020, on the other hand, we can see the shock of BCR to EG in Vietnam during this period In addition, with the approach based on the credit/GDP ratio, the thesis uses a threshold regression model, in which the credit/GDP ratio is considered as a threshold variable to partition the impact of BC on EG in Vietnam Secondly, methods of analysis, synthesis, comparison, collate are used to list, analyze, compare, synthesize theories and previous studies to clarify the theoretical of BC, BCR, EG, the impact of BC on EG as well as the theory of credit growth threshold This method is also used to analyze and connect the reality of BCR and EG in Vietnam in the period 2004-2020 with the research results of the topic, as a basis for discussion and recommendations, policy implications for management agencies 1.5 NEW CONTRIBUTION OF THE THESIS 1.5.1 Academically Firstly, the thesis contributes further to the quantitative research method of the impact of BC on EG with a comprehensive assessment approach Approach to assessing the impact of BC together with macro variables related to physical capital input of the growth and analyzing the impact of the structure of BC by industry group on the EG in Vietnam Secondly, the study deeper evaluates the impact of BC on EG in Vietnam by considering the credit/GDP ratio as the threshold variable in the regression model to clarify the impact coefficient of BC on EG by impact zone Thirdly, the thesis improves the statistical significance of the p-value in the regression and test results by switching to Bayes factor bound (BFB) 1.5.2 Practically Firstly, the thesis comprehensively assesses the impact of BC on EG in Vietnam in the period 2004-2020, this is the period when the economy has many turning points before and after the financial crisis The domestic macro factors have many specific fluctuations such as: high inflation rate sometimes at double digits, high BC, registered and disbursed FDI capital increased sharply, stimulus package implemented by State management agencies with big value However, in fact the speed of BCG and EG is not equal, so the thesis can answer the question about impact of BC on EG and the relationship between the two variables in this period Secondly, BC scale to GDP in Vietnam tends to increase and stay at a high level in the period 2004-2020, The study uses the credit/GDP ratio as a threshold variable to determine the impact partition of BC on EG, on the one hand, it is clear the level of impact of BC in each period of the study period, on the other hand, based on the extent of the impact that provides recommendations and policy implications to control the appropriate credit/GDP ratio in Vietnam 1.6 STRUCTURE OF THE THESIS Chapter 1: Introduce research Chapter 2: Theoretical basis about the impact of bank credit on economic growth Chapter 3: Research model for impact assessment Chapter 4: Research results and discussion Chapter 5: Conclusion and policy implications CHAPTER 2: THEORETICAL BASIS ABOUT THE IMPACT OF BANK CREDIT ON ECONOMIC GROWTH 2.1 BANK CREDIT 2.1.1 Bank credit concept 2.1.2 Bank credit classification Within the research scope of the thesis, the author deeper analyzes the BC structure for each sector group in the economy The relative importance of each region tends to change as the economy develops over time, low developed countries, the manufacturing sector produces raw materials is high proportion, developing countries focus more on industry, building infrastructure, the service sector is more developed than in advanced countries Depending on the phases of the economic development cycle and the strengths of each country's operating sectors, the banking system will allocate credit way efficiently boosting the output of the economy, along with the level of economic development, the banking system is becoming more complete and growing to meet the diverse needs of capital and intermediary activities (Greenwood and Smith, 1997; Tongurai and Vithessonthi, 2018) In the early stages of economic development, the size of the banking system is therefore at a small level, bank credit flows are distributed to all sectors including: agriculture, industry and services, in which the amount of funding from banks is concentrated on advantageous fields in each country, building infrastructure that contributes to rapid production growth In the stage of economic development, the banking system is accordingly larger, the amount of credit capital is focus in industries, high technology, service industries that bring a lot of added value, credit capital flows to serve agricultural activities tend to shift to green agriculture, apply science and technology or finance in the form of supply chains Short, along with the shifting trend of the economy, the activities of the banking system in general and the BC structure in particular have had appropriate changes, BC structure focusing on key industries, which the reality of macroeconomic conditions, supporting the development of the economy, promoting sustainable EG 2.1.3 Bank credit role 2.1.4 Bank credit growth concept BCR is an increase in the amount of credit by banks sytem to meet the capital needs of entities in the economy in a given period of time BCR associated with inflation control and macroeconomic stability, excessive increase in credit inflows into the economy while the borrowers absorption is limited, is a warning sign of the risk of rising inflation, asset price bubbles, high bad debts, threatening the stability of the financial system, which can bring the economy into crisis 2.1.5 Bank credit growth metrics 2.1.6 Factors affecting credit growth 2.1.6.1 Factors inside the bank 2.1.6.2 Factors outside the bank 2.2 ECONOMIC GROWTH 2.2.1 Economic growth concept Table 2.1 Summary of theories of economic growth School Classical school Content Author Focus on the process of accumulating physical capital Technological progress, social and Smith (1776) institutional factors supporting EG Ricardo (1817) Economic growth depends on natural resources Government intervention in the management and Keynes (1936) maintenance of EG The focus is on the fixed factor production function Harrod (1939), Domar (1946) Harrod – Domar and the constant to scale efficiency function Emphasizing the essential role of savings and the model efficiency of investment capital for EG Keynes Consider factors affecting total factor productivity as endogenous variables besides physical capital and human capital EG is not related to endogenous factors, but will converge to a certain rate in the steady state Saving, increasing the number of workers, Neoclassical technological progress (which are exogenous factors) affect the EG rate Focusing on technological progress, knowledge capital and research, development activities Modern Theories associated with the development process of the economy New perspectives on money supply and demand as well as the role of the Government Endogenous growth Romer (1990), Mankiw et al (1992) Solow (1956), Swan (1956) Friedman (1958), Samuelson (1948), Romer (1990) Source: Compiled by the author EG is not only the increase in the size of a country's output or its per capita income after adjusting for inflation, but also the process of changing the structure of production and