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For these reasons, this study focuses\non the development of domestic banking sector in CLMV countries with special\nreference to Myanmar.\nOne of the major financial reforms in CLV is interest rate deregulation\ntogether with controlling inflation. This results in a positive real interest rate that\ncontributes to financial deepening especially in Cambodia, Laos, and Viet Nam. All\nof the CLMV countries, without exception, were formerly command economies with\nSoviet style mono-bank system. Therefore, it is a great achievement that they were\nable to transform their banking system to one which is more suited to a marketoriented\neconomy in such a short time. However, this study explores not only the\npattem of relationship between banking sector development and economic\ndevelopment in CLMV countries but also the major issues of Myanmar banking\nsector. Moreover, this study proposes a design of financial market structure in\nMyanmar.\n\\fhen Cambodia, Laos, and Viet Nam liberalized their financial sectors, they\nbecame dollarized countries due to the weaknesses of domestic financial sector and\nmacroeconomic and political instability. Financial liberalization together with\ninflationary finance causes dollarization and misallocation of resources in Laos. In a\nsituation where a country has underdeveloped financial market, inflationary financing\nand financial liberalization could lead to capital outflow, dollarization, and financial\ndisintermediation.\nIn Myanmar on the other hand negative real interest rates hinder the\ndevelopment of the financial sector that decreases savings and investments.\nMyanmar\u0027s savings flow through informal financial intermediation and self-financing\nrather than through the formal channel. Most small and medium scale enterprises\n(SMEs) have to rely heavily not only on self-financing but also on informal sources of\nfinancing.\nThis study found many factors that hinder financial intermediation in\nMyanmar. In particular, this study points out some major factors that weaken the\nbanking system: interest rate ceilings, fiscal imbalances, high reserve requirements,\nfixed exchange rate, collateral-based lending, weak lending practices, and lending to\nrelated firms. These factors restrict the financial intermediation function that limits the\nsize of the banking system. Banking sector cannot meet the financial requirements of\nSMEs. [n addition, low level of per capita income also reduces the level of savings\nthat limits the size of formal banking system. It implies that the smaller the formal\nbanking sector, the larger the informal financial sector.\nAlthough informal financial sector contributes to economic development to\nsome extent, high cost of capital and low grade technology cannot contribute to the\neconomy efficiently. Low savings and low investments cannot contribute to the\napplication of capital intensive technology. One possible way is to improve domestic\nsavings mobilization through the banking system and to develop money and capital\nmarkets to channel funds for investment efficiently.Finally, efficient financial system reduces information and transaction costs\nwhich in turn could promote high saving rates, good investment decisions,\ntechnological innovation, and long-run growth rates. Thus, financial reforms should\nbe introduced to strengthen the domestic banking system and to improve the\nsupervision of the whole financial system. It is essential to provide a more relaxed\nregulatory framework to strengthen the banking sector and to develop new financial\ninstruments by introducing financial markets."}]}, "item_1583103120197": {"attribute_name": "Files", "attribute_type": "file", "attribute_value_mlt": [{"accessrole": "open_access", "date": [{"dateType": "Available", "dateValue": "2023-02-24"}], "displaytype": "preview", "download_preview_message": "", "file_order": 0, "filename": "Tin Tin Htwe -2, PhD-17.pdf", "filesize": [{"value": "11 MB"}], "format": "application/pdf", "future_date_message": "", "is_thumbnail": false, "licensetype": "license_0", "mimetype": "application/pdf", "size": 11000000.0, "url": {"url": "https://meral.edu.mm/record/8760/files/Tin Tin Htwe -2, PhD-17.pdf"}, "version_id": "4c657612-09e2-4868-9661-62ea6e9f4a1e"}]}, "item_1583103233624": {"attribute_name": "Thesis/dissertations", "attribute_value_mlt": [{"subitem_awarding_university": "Yangon University of Economics", "subitem_supervisor(s)": [{"subitem_supervisor": "Professor Dr. Khin San Yee"}]}]}, "item_1583105942107": {"attribute_name": "Authors", "attribute_value_mlt": [{"subitem_authors": [{"subitem_authors_fullname": "Tin Tin Htwe(2)"}]}]}, "item_1583108359239": {"attribute_name": "Upload type", "attribute_value_mlt": [{"interim": "Other"}]}, "item_1583108428133": {"attribute_name": "Publication type", "attribute_value_mlt": [{"interim": "Dissertation"}]}, "item_1583159729339": {"attribute_name": "Publication date", "attribute_value": "2007-01-01"}, "item_title": "A Study on the Development of Banking Sector in CLMV Countries with Special Reference to Myanmar(1991-2004)", "item_type_id": "21", "owner": "20", "path": ["1582965742757"], "permalink_uri": "https://meral.edu.mm/records/8760", "pubdate": {"attribute_name": "Deposit date", "attribute_value": "2023-02-24"}, "publish_date": "2023-02-24", "publish_status": "0", "recid": "8760", "relation": {}, "relation_version_is_last": true, "title": ["A Study on the Development of Banking Sector in CLMV Countries with Special Reference to Myanmar(1991-2004)"], "weko_shared_id": -1}
A Study on the Development of Banking Sector in CLMV Countries with Special Reference to Myanmar(1991-2004)
https://meral.edu.mm/records/8760
https://meral.edu.mm/records/8760d53c3caa-a0ec-47c9-9e11-00cf51ece5b3
8a44f8ea-4b93-44a9-8a7a-cda1de04a099
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Dissertation | ||||||
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Title | ||||||
Title | A Study on the Development of Banking Sector in CLMV Countries with Special Reference to Myanmar(1991-2004) | |||||
Language | en | |||||
Publication date | 2007-01-01 | |||||
Authors | ||||||
Tin Tin Htwe(2) | ||||||
Description | ||||||
As domestic banking industry plays a major role in financial sector development, efficient financial intermediation can contribute to the deepening of the financial sector. The efficient domestic banking institutions and financial markets are important in supporting economic development. For these reasons, this study focuses on the development of domestic banking sector in CLMV countries with special reference to Myanmar. One of the major financial reforms in CLV is interest rate deregulation together with controlling inflation. This results in a positive real interest rate that contributes to financial deepening especially in Cambodia, Laos, and Viet Nam. All of the CLMV countries, without exception, were formerly command economies with Soviet style mono-bank system. Therefore, it is a great achievement that they were able to transform their banking system to one which is more suited to a marketoriented economy in such a short time. However, this study explores not only the pattem of relationship between banking sector development and economic development in CLMV countries but also the major issues of Myanmar banking sector. Moreover, this study proposes a design of financial market structure in Myanmar. \fhen Cambodia, Laos, and Viet Nam liberalized their financial sectors, they became dollarized countries due to the weaknesses of domestic financial sector and macroeconomic and political instability. Financial liberalization together with inflationary finance causes dollarization and misallocation of resources in Laos. In a situation where a country has underdeveloped financial market, inflationary financing and financial liberalization could lead to capital outflow, dollarization, and financial disintermediation. In Myanmar on the other hand negative real interest rates hinder the development of the financial sector that decreases savings and investments. Myanmar's savings flow through informal financial intermediation and self-financing rather than through the formal channel. Most small and medium scale enterprises (SMEs) have to rely heavily not only on self-financing but also on informal sources of financing. This study found many factors that hinder financial intermediation in Myanmar. In particular, this study points out some major factors that weaken the banking system: interest rate ceilings, fiscal imbalances, high reserve requirements, fixed exchange rate, collateral-based lending, weak lending practices, and lending to related firms. These factors restrict the financial intermediation function that limits the size of the banking system. Banking sector cannot meet the financial requirements of SMEs. [n addition, low level of per capita income also reduces the level of savings that limits the size of formal banking system. It implies that the smaller the formal banking sector, the larger the informal financial sector. Although informal financial sector contributes to economic development to some extent, high cost of capital and low grade technology cannot contribute to the economy efficiently. Low savings and low investments cannot contribute to the application of capital intensive technology. One possible way is to improve domestic savings mobilization through the banking system and to develop money and capital markets to channel funds for investment efficiently.Finally, efficient financial system reduces information and transaction costs which in turn could promote high saving rates, good investment decisions, technological innovation, and long-run growth rates. Thus, financial reforms should be introduced to strengthen the domestic banking system and to improve the supervision of the whole financial system. It is essential to provide a more relaxed regulatory framework to strengthen the banking sector and to develop new financial instruments by introducing financial markets. |
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Thesis/dissertations | ||||||
Yangon University of Economics | ||||||
Professor Dr. Khin San Yee |