DEVELOPING AN EARLY WARNING SYSTEM FOR FINANCIAL CRISES IN VIETNAM
Journal Title: Asian Economic and Financial Review - Year 2017, Vol 7, Issue 4
Abstract
In this paper, we develop an applicable early warning model that can predict financial crises for Vietnam. To achieve this goal, we analyze and extend the existing early warning models which have been developed by Kaminsky et al. (1998); Goldstein et al. (2000) and Edison (2003) by using the signal approach. The model observes several indicators (signals) that tend to have an unusual behavior in the periods preceding a financial crisis. When an indicator exceeds or falls below a given threshold, then it sends a ?signal? that a financial crisis might occur within a certain period (12 or 24 months). We use 14 most relevant indicators to predict potential crises in Vietnam?s economy. In terms of practice, policy makers should have better insights about the vulnerability of the economy in order to recognize financial crises at an earlier stage. Therefore, the authors offer some recommendations for policy makers how to achieve the highest efficiency in warning and preventing future financial crises in Vietnam.
Authors and Affiliations
Tristan Nguyen*| Fresenius University, Munich/Germany, Nguyen Ngoc Duy| Berlin School of Economics and Law, Berlin/Germany
Keywords
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- EP ID EP2350
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