{
  "title": "Credit Misallocation and Economic Growth in Vietnam",
  "publication": "IMF Working Papers, September 6, 2019",
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  "summary": "The legacy of non-performing loans and high opportunity cost of government financing of bank recapitalization impeded the efficiency of financial intermediation and are an important policy issue in Vietnam. This paper presents a theoretical and empirical analysis of the issue.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- The legacy of non-performing loans and high opportunity cost of government financing of bank recapitalization impeded the efficiency of financial intermediation and are an important policy issue in Vietnam.\n- The paper presents both a theoretical and an empirical analysis of credit misallocation in Vietnam.\n- Empirical analysis using corporate data indicates credit misallocation between state owned enterprises and private firms in Vietnam.\n- Theoretical analysis embeds a micro-founded banking model in a political economy setting to assess factors determining the size of bank recapitalization and its effects on:\n  - the efficiency of financial intermediation,\n  - economic growth,\n  - welfare.\n- The analysis suggests that recapitalization depends on an array of factors, including:\n  - the tightness of the government budget,\n  - the decision maker’s concern for the favored sector."
    },
    {
      "heading": "Empirical findings",
      "content": "- Evidence of credit misallocation between state owned enterprises and private firms in Vietnam is reported based on corporate data."
    },
    {
      "heading": "Theoretical framework and mechanisms",
      "content": "- A micro-founded banking model is embedded in a political economy setting.\n- The model is used to assess determinants of bank recapitalization size and its effects on financial intermediation efficiency, economic growth, and welfare.\n- Recapitalization outcomes are linked to:\n  - government budget tightness,\n  - policymakers’ preference or concern for the favored sector."
    },
    {
      "heading": "Policy implications and issues highlighted",
      "content": "- Non-performing loans and government-funded bank recapitalization carry a high opportunity cost that impedes financial intermediation efficiency.\n- Recapitalization policy choices are influenced by fiscal constraints and political economy preferences, affecting growth and welfare outcomes.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/09/06/credit-misallocation-and-economic-growth-in-vietnam-48606"
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    "Authors: Mitsuru Katagiri",
    "Published: September 6, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513511764.001",
    "The legacy of non-performing loans and high opportunity cost of government financing of bank recapitalization impeded the efficiency of financial intermediation and are an important policy issue in Vietnam.",
    "The paper presents both a theoretical and an empirical analysis of credit misallocation in Vietnam.",
    "Empirical analysis using corporate data indicates credit misallocation between state owned enterprises and private firms in Vietnam.",
    "Theoretical analysis embeds a micro-founded banking model in a political economy setting to assess factors determining the size of bank recapitalization and its effects on:",
    "The analysis suggests that recapitalization depends on an array of factors, including:",
    "Evidence of credit misallocation between state owned enterprises and private firms in Vietnam is reported based on corporate data.",
    "A micro-founded banking model is embedded in a political economy setting.",
    "The model is used to assess determinants of bank recapitalization size and its effects on financial intermediation efficiency, economic growth, and welfare.",
    "Recapitalization outcomes are linked to:",
    "Non-performing loans and government-funded bank recapitalization carry a high opportunity cost that impedes financial intermediation efficiency.",
    "Recapitalization policy choices are influenced by fiscal constraints and political economy preferences, affecting growth and welfare outcomes.",
    "**Working Paper**"
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