Journal of Applied Finance & Banking

Asymmetric responses of commercial banks to monetary policy in a transitional economy:the case of Vietnam

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  • Abstract

    This study investigates how Vietnamese commercial banks respond to countercyclical monetary policy actions. At first glance, the empirical findings suggest the asymmetrical response of Vietnamese commercial banks to countercyclical monetary policy to be competitive and monetary authority successfully utilizes monetary policy instruments to achieve its objectives. In light of the known characteristics of the Vietnamese economy, the empirical results may be alternatively interpreted as the consequence of graft maximizing behavior of bank management operating in a corrupt and opaque environment. Thus, to correct these problems, a strong political will and commitment to reforming the system and implementing appropriate checks and balances in the political system in the country to formulate policy measures needed to establish a competitive, transparent, competitive, and efficient banking and financial system which would be conducive to further economic and social progress.