Macroeconomic determinants affecting the growth of foreign currency loans in Vietnam

Abstract

After joining in WTO, the trading in foreign currency of commercial banks

in Vietnam has rapidly develop especially foreign currency lending. As a result this paper studies the impact of macroeconomic determinants on the growth of foreign currency loans. They are change interest rate differential, change in inflation rate volatility; change in exchange rate volatility, change in minimum variance portfolio and change in openness. The aim is to give the overview of the relationship between these explanatory variables and foreign currency lending. From that, it helps Vietnam government to have appropriate macro policies to control the lending growth in foreign currency.

The research results are discovered by the relationship between historical figures. So quantitative is employed with data sample of 60 observations. The study finds that except change in minimum variance portfolio, the other variables affect the growth in foreign currency lending. Among them, change interest rate differential and change in openness has strongest impact on the dependent variable. The smallest impact on the growth of foreign currency lending is change in exchange rate volatility.