Viet Nam: Financial Sector Deepening Program
The Financial Sector Deepening Program was formulated to address key constraints to deepening of the finance sector. These included the development of a money market, actions to improve the depth and liquidity of the capital market, and efforts to strengthen institutions and capacity of the nonbank finance sector. The program utilized a programmatic approach with two subprograms to focus on the development of a money market and deepening of the capital market, both basic building blocks of finance sector development. Also, the program supported capacity building of nonbank finance institutions. The programmatic approach was justified on the basis that finance sector development is hierarchical and required careful sequencing to safeguard monetary and financial stability.
The program was built on the post-partnership framework of the Financial Sector Program Loan (FSPL) implemented in three clusters to support Viet Nam’s transition to market-based financial system. In particular, FSPL1 supported the introduction of basic concepts and systems that were prerequisites to developing a market-based financial system. FSPL2 began to develop the nonbank finance sector while FSPL3 sought to increase alternative channels for market-based financial intermediation. The program was a continuation of ADB’s support to deepen the finance sector and ensure sustained expansion of nonbank financing in Viet Nam. The program’s added value was the contribution to the development of the money market, resolution of systemic risk in the capital market, and strengthening the financial infrastructure and institutional capacity.
This report validates the completion report's assessment of the program. IED overall assessment: Successful.