Year: 2023 | Month: November | Volume: 10 | Issue: 11 | Pages: 165-185
DOI: https://doi.org/10.52403/ijrr.20231120
Empirical Study on Dollarization in Vietnam
Vu Thanh Son1, Vu Viet Ha2, Le Duc Hoang3, Le Duc Lu4
1Central Committee of Organization and Personnel, Vietnam
2Vietnam Bank for Foreign Trade (Vietcombank) - Thanh Xuan Branch, Vietnam
3Faculty of Economic Mathematics, National Economics University, Hanoi, Vietnam
4School of Banking and Finance, National Economics University, Hanoi, Vietnam
Corresponding Author: Le Duc Hoang
ABSTRACT
The research is aimed at investigating the facts and determinants of dollarization in Vietnam in the period of 2010-2019. Additionally, the monetary policies implemented by the government and the State Bank of Vietnam are assessed to find their contribution to the success of de-dollarizing in Vietnam. The empirical test is carried out with 120 observations using OLS model. Key findings are: (i) inflation, exchange rate and USD deposit rate have positive impacts on the dollarization in Vietnam; (ii) consumer price index has negative impact on the dollarization; (iii) the two variables of imports and foreign direct investment are not significant, which is different from other previous studies. This may come from the fact that Vietnam is very active in importing and attracting foreign investment, and external investors do not worry about dollarization situation in Vietnam. Some recommendations to the Government and the State Bank of Vietnam are proposed to reduce dollarization in Vietnam to strengthen the reputation and belief on Vietnam dong.
Keywords: Asset substitution, Currency substitution, Devaluation, Dollarization, Vietnam
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