Sources of credit boom in Vietnam in the priod 2007- 2010

Abstract

In countries where financial markets are not developed as Vietnam, bank credit is considered as one of the most important capital sources for the investment of all sectors. In recent years, Vietnam’s bank credit continued to grow, increased access to finance and greater support for investment and economic growth, contributing significantly to the “doi moi” process. However, this does not mean that in any case the bank credit growth is higher, credit is more effective. In many countries that credit expanssion is too fast (“credit boom”), such booms may have negative effects on the soundness of the banking system, leading to economic instability. In Vietnam, bank credit is also rated as overheating especially in the period 2007- 2010. The paper attempts to analyze the sources of credit boom in Vietnam, thereby providing the basis for proposed solutions to the problem.