Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.Tác động của dòng vốn quốc tế đến sự ổn định tài chính ASEAN.
1 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM HO CHI MINH UNIVERSITY OF BANKING LUONG THI THU THUY THE IMPACTS OF INTERNATIONAL CAPITAL FLOWS TO ASEAN FINANCIAL STABILITY SUMMARY OF DOCTORAL THESIS Ho Chi Minh City-2022 MINISTRY OF EDUCATION AND TRAINING STATE BANK OF VIETNAM HO CHI MINH UNIVERSITY OF BANKING LUONG THI THU THUY THE IMPACTS OF INTERNATIONAL CAPITAL FLOWS TO ASEAN FINANCIAL STABILITY SUMMARY OF DOCTORAL THESIS Major: Finance-Banking Major code: 9340201 Scientific instructor: Dr Nguyen Tran Phuc Dr Tran Viet Dung Ho Chi Minh City, 2022 SUMMARY OF THESIS Title: Study on the impact of international capital flows on ASEAN financial stability Abstract: Based on a sample of 96 commercial banks in 06 ASEAN countries from 2008 to 2019, the study aims to assess the impact of different types of international capital flows on financial stability of these countries Empirical results have highlighted the following main issues: (i) the relationship between indirect capital flows and financial instability is quite significant in Vietnam as well as in ASEAN countries in the sample; (ii) Relatively speaking, both direct and other inflows give mixed and less pronounced results, although there is evidence that direct capital inflows increase financial stability and capital inflows other are associated with increased instability; (iii) after the crisis period, fluctuations in international capital flows, in particular indirect capital flows, have a strong impact on financial stability when compared to the crisis period and (iv) the impact on financial stability is quite strong This movement is also relatively more evident through large banks than through small banks This can be an important indicator that after the crisis period, under competitive pressure to attract investment, there have been certain easing by the government on controlling international capital flows The author believes that the study will attract the interest of both managers and policy makers Keywords: International capital flow; Indirect Capital Flow, Direct Capital Flow; Financial stability CHAPTER 1: INTRODUCTION 1.1 The necessity of the research In the trend of globalization, financial integration and financial liberalization are inevitable trends to attract international capital flows and promote economic growth, especially for emerging economies However, in addition to the benefits brought from international capital flows such as increasing investment capital for the economy, developing the financial system, international capital flows also bring negative impacts The credit boom and the growing financial bubble are the risks leading to bank failure and financial crisis Therefore, the issue of financial stability with risk tolerance from international capital flows is a matter of interest to economic researchers and policy makers around the world and in the region In the world, there have been many studies on the transmission mechanism as well as the impact of international capital flows including indirect capital flows, direct capital flows and other capital flows on financial stability and risks of the economy in Vietnam developed countries such as the US, Switzerland, Canada, the Netherlands and emerging countries such as Brazil, China, and ASEAN (Kaminsky, Lizondo and Reinhart, 1998, Illing and Liu, 2003, Van den End, 2006, Sun) , 2015) Most of these studies consider the impact of international capital flows from a macro perspective such as exchange rates, inflation, interest rates and financial markets Recent research trends emphasize the role of banks as the main cause of financial instability Up to now, although there have been many studies on financial stability in terms of stability of the banking system such as bank governance, policy regulations, supervisory organization, capital adequacy, efficiency, etc performance, banking concentration and competition, technological innovation and cybersecurity risks, credit risks and liquidity risks, but the impact of international capital flows on stability has not been studied finance from this perspective, especially in Southeast Asian countries (ASEAN), including Vietnam The ASEAN Economic Community (AEC) was established in 2015 with the goal of forming a stable, prosperous and highly competitive ASEAN economic region, in which goods, services, investment will be moved freely and capital will flow more freely, the economy will develop evenly, poverty and socio-economic disparities will be reduced With the formation of the AEC, ASEAN has become a highly open economic region whose growth depends heavily on factors in the region and in the world Currently, ASEAN is emerging as a destination to attract global investment flows from China According to the ASEAN Investment Report (AIR), direct investment (FDI) inflows into ASEAN decreased to US$ 42 billion in 2008 and 2009 under the impact of the global financial crisis but has since witnessed an increase strongly since 2010 and reached a record of 182 billion USD in 2019 The ratio of FDI into ASEAN to total global FDI also increased from 5.6% in 2016 to 11.9% in 2019 Besides capital inflows For FDI, ASEAN is also an active destination of venture capital (VC - Venture Capital) In the report "Review of VC funds in Southeast Asia in the first quarter of 2020", Deal Street Asia stated that venture capital funds in the region have raised committed capital totaling about $5.8 billion in 2019 This trend is forecast to continue thanks to dynamic industrial development, as well as the improvement of the investment and business environment in the region With the movement of international capital flows into ASEAN, contagion and contagion from international capital flows are inevitable, which the financial crises of 1997-1998 and 2008-2009 are evidenced by In fact, indirect and other capital flows are often more volatile than direct capital flows and this volatility has increased in recent times The movement of indirect and other capital flows can increase risks and vulnerabilities to the banking system, thereby affecting the financial system as well as the macro economy Therefore, empirical evidence on financial stability and the impact of different types of international capital flows on financial stability in ASEAN countries becomes an urgent issue in research and planning policies, especially monetary policy and monetary-financial stability, contribute to ensuring the safety of the banking-financial system, limiting and preventing risks and financial crises in the future future, stabilizing the macro-economy, thereby enhancing the competitiveness of economies and sustainable development in the region This research topic is limited to the scope of international capital flows and impacts on financial stability from a micro perspective through banks, ensuring topicality, independence and no or little influence overlap when setting research problems as well as research objectives and methods compared with previous research works Therefore, the study "Impact of international capital flows on ASEAN financial stability" has both theoretical and practical significance 1.2 Research objectives and questions The overall research objective of the thesis is to study the impact of international capital flows on financial stability in ASEAN countries, including Vietnam, thereby providing policy suggestions and proposals for solutions appropriate solutions towards the prevention and safety supervision of the financial system, contributing to financial stability Starting from the above general goal, the thesis will be detailed with specific research objectives as follows: Firstly, to analyze the impact of international capital flows including indirect capital flows, direct capital flows and other capital flows on ASEAN financial stability Second, to compare the impact of international capital flows on ASEAN financial stability during and after the crisis Third, to compare the impact of international capital flows on ASEAN financial stability by bank size To achieve the above specific research objectives, the thesis focuses on answering the following main research questions: Firstly, how international capital flows affect ASEAN financial stability? Second, how does the impact of international capital flows on ASEAN financial stability differ during the crisis period and after the crisis? Third, how does the impact of international capital flows on ASEAN financial stability differ by bank size? 1.3 Research objects and scope The research object of the thesis is financial stability, international capital flows and the impact of international capital flows on the financial stability of ASEAN including Vietnam Research scope: The thesis focuses on studying financial stability through stabilizing the banking system and the impact of international capital flows on the financial stability of ASEAN countries (Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam) Research period: determined in the period 2008-2019, which is the period of time when the ASEAN economy goes through the crisis and post-crisis period so that the topic can study the difference in the impact of international capital flows economy to financial stability in different periods 1.4 Research Methods The thesis uses the main research method which is the quantitative method to analyze the impact of indirect as well as direct international capital flows and other capital flows on ASEAN financial stability Besides, the thesis also combines methods of analysis, synthesis and comparison over time to show the general trend of fluctuations of the main variables in the research 1.5 Contributions of the thesis Theoretically, the thesis will add empirical evidence on the impact of international capital flows on ASEAN financial stability, especially analyzing the role and extent of each type of international capital flow (indirect capital flows) direct and other capital flows) to the financial stability of ASEAN countries In addition, the thesis further researches in considering and comparing the impact of international capital flows on financial stability in different economic periods (crisis and post-crisis) with other characteristics different bank sizes In practical terms, based on research results, the thesis makes suggestions for researchers and policy makers in monitoring and supervising the financial system, managing international capital flows towards risk prevention and forecasting in order to develop financial stability in ASEAN, including Vietnam, contributing to promoting sustainable economic development in the region 1.6 Structure of the thesis Chapter 1: Introduction to the research topic Chapter 2: Theoretical background and research overview Chapter 3: Research models and methods Chapter 4: Impact of international capital flows on ASEAN financial stability Chapter 5: Conclusion and policy implications CHAPTER 2: THEORETICAL BASIS AND RESEARCH OVERVIEW 2.1 Concepts related to the research problem: 2.1.1 The concept of international capital flows International capital flows include: foreign direct investment (FDI) inflows, foreign indirect investment (FII) flows or often called international capital flows by category International Portfolio Investment) and other capital flows Foreign direct investment capital is the flow of investment capital in part or the whole of a project or enterprise in order to seek long-term benefits, directly control and manage investment activities through owning a level of shares certain Foreign indirect capital flows include capital inflows from equity investments, bonds and short-term debt instruments, and capital flows borrowed and deposited through the banking system (Borio, 2007) Other capital flows are capital flows for other investments such as trading of derivative financial assets, trade credits and advances, assets and liabilities of overseas commercial banks, etc (Le Phan) Dieu Thao and Nguyen Tran Phuc, 2015) As Lee (2004) noted, no matter how defined, the difference between these types of capital flows is the form of investment and the issue of control, management, and long-term commitment That is why direct capital flows often tend to be more stable and long-term, while indirect and other capital flows are always changing and volatile in the short-term 2.1.2 The concept of financial stability Financial stability is one of the two main, traditional and inseparable tasks (monetary stability and financial stability) of a central bank (central bank) There are two streams of approaches to the concept of financial stability, including: a direct (descriptive) approach and an indirect approach through determining financial stability in its negative perspective, i.e define financial instability to determine financial stability According to the European Central Bank (Duisenberg, 2001): “Financial stability is a state in which the financial system, including financial intermediaries, markets and financial infrastructure, is able to withstand shocks and risks posed by financial imbalances, thereby reducing the likelihood of the collapse of financial intermediaries, which have a negative impact on the allocation of savings and investment” Despite certain differences, the concept of financial stability remains closely related to the efficiency of the financial system 2.1.3 Theoretical basis related to the research problem 2.1.3.1 Theory of international capital flows The theory of direct capital flows: theories explaining foreign direct investment activities include: OLI model, theories of international capital markets, theories of international trade, theories of international trade on international business The theory of indirect and other capital flows: the shifting basis of indirect and other capital flows is explained based on Lee's theory of "push and pull factors" (1966) Fisher's capital flow direction (1980), liquidity preference theory recognized by Keynes (1936) and developed by Tobin (1967), modern portfolio theory by Markowitz (1959) 2.1.3.2 Theory of financial stability Theories of financial stability have been researched and developed to explain financial crises such as: monetarist theory, Post-Keynesian theory, Mundell - Fleming theory, Minsky's cyclical theory, information asymmetry theory, behavior theory, game theory Crockett (1996) suggests that attention should be paid to the sources of instability emanating from financial intermediaries and the factors that give rise to excessive volatility in asset prices Under the influence of international capital flows, investors increased debt leverage through borrowing from financial intermediaries, and asset prices in the market increased, creating a financial bubble A sudden stop or reversal in international capital flows can cause a credit squeeze and burst asset price bubbles that lead to bank failures and financial crises 2.1.3.3 Theory on the impact of international capital flows on financial stability There is broad agreement in theories that international capital flows can bring both a "good" and a "bad" to a country's financial system Studies have shown that from a global perspective, capital flows by foreign investors enable an efficient allocation of world savings and efficient use of these capital resources In addition, international capital flows create 10 opportunities for trade between countries, fostering financial innovation, and diversifying investment portfolios and sharing risks (Lee, 2004,Frame & White) , 2004) Therefore, international capital flows play an essential role, especially in developing countries Besides, one of the distinguishing characteristics of international capital flows is its volatility and suddenness, especially indirect and other capital flows According to Mishkin (2004), the main transmission channels of capital flows include: interest rate channel, exchange rate channel, asset price channel, credit channel, thereby affecting output, unemployment and inflation in the economy Large capital inflows often cause credit booms and deterioration in credit quality, while simultaneously blowing up the prices of financial assets and real estate, causing wealth effects on the economy (Reinhart and Reinhart) , 2008) The movement of international capital flows can increase risks and vulnerabilities to the financial system and the macro economy and pose many challenges in the management of the financial system Research by Bruno & Shin (2014) has shown that capital flows tend to be related to the accumulation of leverage in the banking sector And therefore, international capital flows are not only related to macroeconomic issues such as inflationary pressures, hot growth, concerns about competitiveness, exports (Blanchard et al (2016)) but also can cause financial instability risk through the banking system (Dell'Ariccia et al., 2012; Elekdag & Wu, 2013) Based on that, the studies took a microscopic approach through the banking system to further analyze the specification of the core mechanisms behind the transmission of global shocks 2.2 Review of related studies 2.2.1 Review of factors affecting financial stability - Impact on financial stability from global financial integration - Impact on financial stability of domestic factors and global factors - Impact on financial stability through the global banking channel - Impact of foreign borrowing of companies in emerging markets 24 Table 4.5: Regression results with the main explanatory variable with a 1-period lag (1) (2) (3) (4) (5) VARIABLES FS=Z-score FS=LLR FS=NPL L.PORTINVESTRATE L.OTHERINVESTR L.DIRECTINVESTR SIZE CAPITAL LOANSHARE DEPOSITSHARE -6.861*** (2.553) -0.0373 (2.717) 2.046 (2.050) -9.730*** (2.821) 0.284 (2.948) -5.243** (2.310) 5.033 (3.506) -0.927 (1.650) 0.0385* (0.0215) 1.831* (1.007) 0.104 (0.450) 0.730 (0.535) 5.661 (3.589) -0.0844 (1.730) 0.615*** (0.0980) -0.453 (0.908) 0.652*** (0.126) -2.550* (1.329) -0.0334* (0.0179) 2.056** (1.019) 1.087*** (0.418) 1.339** (0.521) GDPGR INF GDPCAP Constant -8.720*** (2.829) 0.101 (2.949) -5.860*** (2.208) 3.449*** (0.646) Observations 682 683 R-squared 0.075 0.110 Robust standard errors in parentheses *** p