The Role of Foreign Financial Institutions in the Development of Financial Market in Vietnam and France

Topics: Bank, Economics, Financial markets Pages: 11 (3117 words) Published: December 14, 2009
The Role of Foreign Financial Institutions in the Development of Financial Market in Vietnam and France

Table of Content
i. Introduction
ii. An overview of the finance market in Vietnam
iii. Foreign financial institutions roles in Vietnam
iv. Foreign financial institutions roles in Vietnam in France v. How to understand the functioning of a trading room
vi. Problem
vii. Outline of the thesis
viii. Reference

In recent years, Vietnam has experienced successful economic growth and integration into the regional economy. Contributing to these results, we must mention the role of banking and financial sector-the nervous system of the economy. While domestic financial institutions continue to maintain a key position in the economy, foreign financial institutions (IFE), not to strengthen their position not in the financial market development and bring their considerable contributions to economic growth.

As part of this speech, I wish to address certain issues related to the presence of foreign financial institutions in Vietnam. A good understanding of their roles and their position in the financial and monetary system of Vietnam and accurate assessment of their impacts on market development, we help establish development policies and to better prepare for economic integration.

An overview of the finance market in Vietnam
For the implementation of the policy of openness and renovation, the Vietnamese economy is changing from planned economy to that of transition under the socialist orientation. By taking several measures and deeper reforms, financial sector and monetary policy has given its contribution to economic stability to the requisition of the objectives of Economic Development. With the enactment of the Banking Act and the Financial Institutions Act 1997, legislation for banking is becoming more sophisticated. The renewal policy by the State Bank has provided very favorable results in financial market development and monetary Vietnam. On the money market, the volume of transactions multiplies dramatically, and how to make transactions and capital structure are varied by the creation of market trading, maintaining the solvency of the market and gives options for foreign investors

The banking sector, including insurance settlements is growing rapidly creating a new channel to raise capital for the economy. Recently, the policies of fiscal and monetary renovation are enforced by the release rate of interest and the lessening of control of exchange rates, and restructuring of commercial banks through several measures such as recapitalization to increase competition, merger and acquisition of private commercial banks in bad situation. Given the results, we must admit that the money market and stock market of Vietnam are still young: the market transactions are very simple; the interest rate does not reflect the balance of supply and demand. The credit market is still low and other financial instruments issued by the State Bank are not efficient enough to create impact on the market. The scale of stock market is too small and market products are modest and we need time to build and develop the technical infrastructure and legislation for stock transactions.

Foreign financial institutions roles in Vietnam
From the 1990s, great changes have taken place in the structure of the status and operations of our financial market. For now, the side of the four state commercial banks, we must mention the presence of 26 branches of foreign banks, 4 banks, joint venture, 41 representative offices of international banks, a company joint venture leasing, 2 companies leasing 100% of foreign capital. In competition with banks, we must also speak of 20 insurance companies including nine foreign capitals.

According to a recent International Monetary Fund (IMF), in most cases, the presence of IFE to emerging economies has made a good contribution to increase efficiencies and create financial...
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