Interest rate regulation and impacts of deposit ceilings on the banking system of Vietnam

Abstract

    This paper examines the effects of interest rate regulation and deregulation on economic growth and especially on banking system for the case of Vietnam. This paper focuses on the impact of deposit ceilings on banking system. Using econometric models and qualitative analysis, the authors find that deposit ceiling can be a potential tool to limit the bank risk in Vietnam. Yet, it has diminished the efficacy of monetary policy transmission and has been evaded via a variety of forms by commercial banks. the findings suggest that this administrative regulation tool can be used standby in short-term, however, should be removed in long-term when the market reaches stabilized occupancy