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Banking development contributes to economic growth and inflation control in Vietnam

Author

Listed:
  • Thao Huong Phan
  • Thao Viet Tran
  • Trang Mai Tran

Abstract

Every nation's banking system, including Vietnam, has always been crucial to its economic growth (EC). Policymakers always believe the proliferation of banks will spur economic expansion, especially in developing countries. The banking system allocates capital effectively, minimising financial risks and avoiding financial shocks to developing economies. In addition to the banking industry's growth, several other factors, such as inflation or trade openness, contribute to GDP development. Therefore, this study examines the connections between trade openness, GDP growth, inflation, and banking development. We use basic variables such as GDP as a stand-in for the rising economy in Vietnam, private domestic credit capital of banks (DCP), inflation rate (INF), and trade openness (TO). The study uses data from 1990-2022 in Vietnam and uses the ARDL model to find short-run and long-run relationships between variables. The estimated results show a positive relationship between the variables in the long and short-term. Based on the research results, some policy suggestions will be made for Vietnam's economic growth and development.

Suggested Citation

  • Thao Huong Phan & Thao Viet Tran & Trang Mai Tran, 2025. "Banking development contributes to economic growth and inflation control in Vietnam," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 29(7), pages 1-16.
    • Handle: RePEc:ids:ijecbr:v:29:y:2025:i:7:p:1-16
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