Optimum Reserves in Vietnam Based on the Approach of Cost-Benefit for Holding Reserves and Sovereign Risk

• 발행기관: 한국유통과학회
• 저자명: Thinh Vuong TRAN Thao Phan Thi Dieu LE
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 7 No.3, 157~165쪽, 전체 9쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2020.03.30

영문 초록

This paper estimates the optimum level of reserves in Vietnam based on the approach of reserves‘ cost-benefit and sovereign risk which is one of developing countries‘ characteristics. The cost of reserves is the opportunity cost when holding reserves. The benefit of reserves is the loss due to country‘s default in case that there is no reserves to finance external debt payment. The optimum reserves is found out by minimizing the total of opportunity cost and loss due to country‘s default with the probability of default. Through the usage of HP Filter method for calculating the loss due to country‘s default, ARDL regression for the risk premium model and lending rate of VND as proxy for opportunity cost together with the Vietnamese economic data in the period of 2005 – 2017, the empirical results show that the optimum reserves in Vietnam is almost higher than the actual reserves during the research period except the point of Q3/2008 and the last point of research period - Q4/2017. Therefore, Vietnam should continue to increase reserves for safety but Vietnam does not need pushing quickly the speed of increasing reserves. In addition, controlling Vietnamese optimum reserves is necessary to help the actual reserves become reasonable.

목차

1. Introduction

2. Literature Review

3. Research Methodology

4. Results and Discussion

5. Conclusions and Policy Implications

References

키워드

Reserves Optimum Reserves Probability of Default