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Thursday, July 25, 2024

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financial markets

Market efficiency is key

Vietnam needs to devise medium- and long-term policies to enhance the efficiency of the manufacturing, service, financial, real estate and other markets, said Dr. Nguyen Quoc Viet, deputy director of the Vietnam Institute for Economic and Policy Research (VEPR), in an interview with The Saigon Times. VAT REDUCTION AS A ONE-SIZE-FITS-ALL SOLUTION The Saigon Times: The Q1/2024 Vietnam Economic Outlook Report: Maintaining Macroeconomic Stability and Creating Development Momentum points out a paradox that while businesses have shut down or exited the market at a record rate, bank profits have remained very high. How can the mismatch between the banking market and the manufacturing market in Vietnam’s economy be explained? How can it be addressed? – Dr. Nguyen Quoc Viet: From the banking perspective, if banks choose a higher-risk appetite in lending operations, they must comply with provisioning regulations to ensure capital safety. As our report indicates, the net interest margin (NIM) of state-run commercial banks is lower than that of privately held commercial banks. This is because state-run banks have more credibility and advantages in selecting safer, more secure businesses and projects for lending. In contrast, private commercial banks raise their NIM to ensure that profits compensate for risks. If […]
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