Examining the Factors Affecting the Allocation of Financial Resources in Vietnam

Abstract

­This study presents a methodology for measuring the allocation of financial resources and examinines the impact of some factors on the economic development. Based on ​​Wurgle (2000), we expand to establish the coefficient by economic structure and examines the main impact of financial development on the allocative efficiencies from 1995 to 2016 in Vietnam and some neighboring countries. The results from the Autoregressive distribution lag model ARDL show the non-linear relationship follows invertedU-shaped between credit to the private sector and the efficiency of allocation follow the inverted U shape. This supports increasing credit to private sector in order to optimize allocation.In addition, we also provide some shreds of evidence of the impact of external financial resources, the development of the stock market, trade openness, money supply, interest rate spread and government spending affect the efficiency of the allocation financial resources.