## Banking Reform in the Lower Mekong Countries

_IMF Policy Discussion Papers, September 1, 2004_

## Source details

**Canonical URL:** [Banking Reform in the Lower Mekong Countries](https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/31/banking-reform-in-the-lower-mekong-countries-17700)

## Other formats

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## Bibliographic details
- Authors: Olaf Unteroberdoerster
- Published: September 1, 2004
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451972870.003

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### Overview
- Paper reviews recent banking reform efforts in the lower Mekong countries (LMCs), comprising Cambodia, the Lao People's Democratic Republic, and Vietnam.
- The three LMCs face the dual challenge of economic development and transition to market-based economies.
- Two-tier banking systems were formally introduced in the late 1980s.
- Based on progress made and brief cross-country comparisons, the paper identifies key challenges and options for further reform.

### Country-specific challenges and conditions
- Vietnam and Lao P.D.R.
  - State-owned banks with weak balance sheets continue to dominate the banking systems of Vietnam and Lao P.D.R.
- Cambodia
  - Main challenge is to reconstruct a banking system after decades of civil strife.

### Subject focus and technical scope
- Subjects covered: Banking; Commercial banks; Credit; Financial institutions; Financial regulation and supervision; Foreign banks; Loan classification; Money; Nonperforming loans.
- Keywords: asset quality; bank; bank intermediation; bank management; Banking reform; banking system; Cambodia; Central and Eastern Europe; Commercial banks; Credit; Foreign banks; intermediation level; Lao P.D.R.; loan; Loan classification; Mekong; Nonperforming loans; PDP; reform target; state-owned commercial bank; transition economics; Vietnam.

### Key findings and diagnostic points
- Two-tier banking systems were formally introduced in the late 1980s.
- Dominance of state-owned banks with weak balance sheets is persistent in Vietnam and Lao P.D.R.
- Cambodia’s banking system requires reconstruction following decades of civil strife.
- Cross-country comparisons are used to identify progress, remaining challenges, and reform options.

### Options for further reform (as identified in the paper)
- Identify and address weak balance sheets in state-owned banks (Vietnam and Lao P.D.R.).
- Reconstruct and develop banking institutions and infrastructure in Cambodia following civil strife.
- Use cross-country comparisons among the LMCs to prioritize reform sequencing and design.

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_Source: https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/31/banking-reform-in-the-lower-mekong-countries-17700_