Local financial development and economic growth in Vietnam
von Tuan Viet Tran
Datum der mündl. Prüfung:2019-04-26
Betreuer:Prof. Dr. Helmut Herwartz
Gutachter:Prof. Dr. Stephan Klasen
Gutachter:Prof. Dr. Sebastian Vollmer
EnglischThe following thesis accumulates four self-contained studies which analyse the relationship between local financial development and economic growth in Vietnam. Local financial development is measured at different levels including three distinct levels (district, sub-district and village) for the first study and at the province level for the other three studies. In order to measure local economic growth, we consider household welfare (consumption, income and consumption smoothing) in the first study and firm growth including sales, investment and firm productivity (returns on asset, equity and employee) in three other studies. The identification strategy for the first three studies is based on identification through heteroscedascity and the fourth study is based on cross-sectional data and ordinary least square with accounting for growth opportunities. The first study “Local financial development and household welfare in Vietnam: Evidence from a panel survey” is based on the data from Thailand - Vietnam Social Economics Panel. We employ a household-level panel data for the periods 2007, 2008, 2010 and 2013 covering three provinces and measure local financial development at the district, sub-district and village levels. Our results show that local financial development has a significantly positive effect on household annual income, consumption and consumption smoothing. The second study “Local financial development, corruption and firm growth in Vietnam” further examines the effect of local financial development on Vietnamese economic development. We use a nationally representative panel survey that covers over 40,000 firms for the period 2009-2013. In this study, we examine the effects of province-level financial development and corruption on the performance of Vietnamese firms in terms of the growth rates of sales, investment and sales per worker. We find that province-level financial development promotes firm growth while corruption hinders it. Moreover, financial development and corruption control are complementary to each other in their effects on firm growth. This suggests that while improving financial development or reducing corruption at the province level promotes firm growth, the marginal effect of financial development is stronger when the level of corruption is low, and vice versa. We also find evidence of the ‘too much finance’ effect after controlling for the level of corruption. Our results are robust to the use of alternative measures of local financial development. In the third study “Does local financial development matter for the gender gap in promoting Vietnamese firm growth?”, we investigate the differential effects of provincial financial development on the growth of firms owned by female or male entrepreneurs in Vietnam. Using the same data set as in the second study, our results show that local financial development promotes firm growth in terms of the growth rates of sales, investment, return on assets (ROA), and return on equity (ROE). The results also suggest that the gender of the owner affects the growth rates of sales, investment, ROA and ROE. Moreover, the joint effect of local financial development and male ownership is significantly negative through all specifications. This implies that local financial development could help female-owned firms reduce their constraints in promoting firm growth. The fourth study “Local financial development and firm growth: Evidence from Vietnam” re-examines the relationship between local financial development and firm growth based on an identification strategy that uses growth opportunities. We find that local financial development promotes the growth rates of sales, investment and sales per worker while reduces the growth rate of wage per sales of small firms. Our results imply that, in sectors with growth opportunities, firms operating in a financially developed locality grow faster than firms located in provinces with a lower level of financial development. Moreover, the difference in growth rates of firms operating in sectors with stronger growth opportunities and firms in sectors with lower growth opportunities is larger if these firms are located in localities with higher financial development.
Keywords: local financial development; Vietnam; household welfare; corruption; gender gap; identification through heteroscedasticity; growth opportunities