Local financial development and economic growth in Vietnam

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The past three decades have witnessed extensive empirical research on the relationship between financial development and economic growth. While the literature has heavily relied on cross-country studies, recent contributions to this literature have focused on examining the effects of local financial development on sub-national economic development. As a particular achievement of the first project period, we found that province-level financial development in Vietnam promotes firm growth while corruption hinders it. In the second project phase, we plan to further examine the relationship among local financial development, corruption control and firm performance in three important directions: firm uncertainty (risk), firm efficiency and the role of foreign bank entry. Taken together, our analyses broaden the understanding of heterogeneities in the effects of local financial development, financial integration and low corruption. Moreover, they will also offer valuable insights into the sustainability of the impacts of financial development and corruption control on firm performance.