The Influence Of Foreign Bank’s Entering On The Vietnam’s Banking System

Alike the development of the world financial intergration, the Vietnamesebanking industry is gradually opening up. More and more foreign banks are allowedto enter the financial market. In particular, since January1,2010, the transition periodof Vietnam’s accession to the WTO was formally completed, Vietnam’s bankingindustry has fully become opened; therefore domestic and foreign banks enjoy thenew era of the banking sector. In this case, some changes will inevitably rise on theVietnamese banking market, since the influence of foreign banks on Vietnamesebanking system is more diversified and more complex.Based on this the research on theoretical level studies the influence of foreignbanks on Vietnamese banking. The main purpose of this research is to study theapproach and the extent of the different foreign banks’ influence on Vietnamesebanking. Firstly, this paper introduces distribution and development of the five formswhich Vietnam law allows foreign banks to enter. While many Vietnam’s currentstudies only generally introduce the development situation of the foreign banks, thisresearch introduces the situation of every foreign bank’s form. That’s why thisaspect may be considered as the innovation in this research. Secondly, the five formsof foreign banks are divided into3groups and their influence on Vietnamese bankingis studied and compared. The result showed that the approaches and the extents of anaffect that each entry form of foreign banks impacts on Vietnam banks differently.They impact positively on Vietnamese banking industry and have some negativeinfluence on Vietnamese banking system. Furthermore, the approach of an impactincludes purchasing shares of Vietnamese banks, demonstration and competitioneffects. Finally, the paper has some recommendations to Vietnam policy makers andto Vietnam Bank: it proposes more banks’ development and enhances thecompetitiveness of Vietnamese commercial banks. Therefore, the paper compensatessome deficiencies of researches in this field and also provides some evidence offoreign banks regulatory monitoring impact.