EVALUATING FACTORS AFFECTING THE STABILITY OF VIETNAM'S FINANCIAL SYSTEM

Abstract

The article evaluates factors affecting the stability of the financial system
in Vietnam. Because of many unpredictable fluctuations, significantly
affecting trade and investment activities, financial stability is always an
essential requirement for Vietnam to ensure the healthy development of the
economy. The data were collected from Vietnamese banks' financial reports
from 2006 - 2020, Word Bank, and the General Statistics Office of Vietnam.
Statistical description, matrix correlation, and regression are methods to
estimate factors affecting the financial system's stability in Vietnam. The
feasible generalized least squares regression method was used to analyze the
influence of the actors on the stability of the Vietnam's financial system. The
Current Account, inflation, Vietnam's economic growth and exchange rate are
internal variables affecting financial stability. Shocks on financial stability
impact the financial stability of internal factors with opposing movement
patterns. Inflation puts severe pressure on the stability of Vietnam's financial
system. Vietnam's economic growth, current account surplus, and exchange
rate contribute to stabilizing the financial system. Besides, the results of empirical research explain the impact of shocks on the financial stability of
internal factors such as the current account, exchange rate, inflation and
Vietnam's economic growth. The paper proposes recommendations to
stabilize the Vietnam's financial system based on the experimental results.