react faster than interest rate movements, which increases the elasticity of money demand for interest rates, accelerates the circulation of capital flows, makes money supply and demand difficult to predict. more informed, the transmission mechanism of monetary policy is more sensitive. To perfect the information system to support the planning and implementation of monetary policy, the SBV needs to implement solutions such as promoting joint ventures, linkages and cooperation with domestic and foreign organizations in business, research and development. develop banking services to quickly access new technologies in line with international practices and standards. Enlist the financial and technical support of international organizations to modernize technology and expand banking services.

**5.4.2 Solutions from the Government**

5.4.2.1 Synchronous coordination of fiscal and monetary policies

In order to enhance the effectiveness of the implementation of monetary and fiscal policies, it is necessary to have a smooth and synchronous combination between the two policies to enhance the implementation efficiency of each policy.

- Establishing a regular and continuous relationship in the process of making and implementing monetary and fiscal policies between the Ministry of Finance and the State Bank. The State Bank must be provided with accurate and timely information from the Ministry of Finance on the amount of capital mobilization and lending of non-budget funds in order to control the total means of payment of the entire economy. Statistics and reports on public finance issues, especially plans to raise capital to cover the state budget deficit, must be promptly provided by the Ministry of Finance to the SBV. In contrast, the State Bank must provide information on interest rates, exchange rates, inflation, and available capital of the commercial banking system to the Ministry of Finance.

- Amending and supplementing legal documents on the state budget and the State Bank in the direction of ensuring the independence of each policy.

- To encourage the use of non-inflationary shortfall financing through the issuance of bonds and bills as a basis for the development of the open market and the SBV's discounting and rediscounting tools.

5.4.2.2 Perfecting the basic conditions towards operating monetary policy according to the mechanism of inflation targeting

- Gradually build independence for the State Bank. Allowing the State Bank to be more proactive in regulating the money supply to suit the requirements of the economy, not to meet the needs of the State budget and the Government. In the implementation of monetary policy, the State Bank must be self-determined in using monetary policy tools to improve the efficiency of using such tools.

- Focus on studying the monetary policy transmission mechanism in Vietnam to clearly determine the time lag, mode and impact level of policies implemented by the State Bank on monetary policy objectives.

5.4.2.3 Completing the banking system

The improvement of monetary policy in Vietnam cannot be separated from the process of perfecting the banking system in general and the organizational and operating apparatus of the State Bank in particular. This is reflected in the fact that the Government must unify and synchronize the issued relevant laws and legal documents, thereby ensuring the effectiveness of the entire system of regulatory documents of the industry. The elaboration and promulgation of sub-law documents should be done quickly and in a timely manner.

**5.5 Limitations of the topic and directions for further research**

- The limitation of the study is that the access to data such as the number of observations is not much in space and time. Therefore, the next research direction is to expand the scope of research on the transmission from the interest rate policy of the State Bank to the commercial banking system in Vietnam. Consider different periods such as pre-crisis, post-crisis, the impact of the process of integration and monetary liberalization on interest rate pass-through.

- The transmission of all SBV's operating interest rates such as interbank interest rates, LSCBs, etc. has not been studied in depth to the deposit and lending rates of all terms of Agribank , so it has not been studied in depth. covers all transmission results. Therefore, it is necessary to study the interest rate transmission in more depth and detail with many different terms and different interest rate subjects such as interbank interest rates, LSCBs, interest rates.

mobilize all terms, interest rates for mortgage loans, interest rates for business loans, interest rates for personal loans,...

- The cause of the short-term incomplete and asymmetrical pass-through has not been explored, ignoring the impact of macro-economic factors and considering the SBV's monetary policy to be transparent. As official interest rates and money market rates change, banks may not find it profitable to adjust their rates immediately. For example, retail interest rates will be less volatile in inelastic markets and the demand curve for retail products in banks may be less elastic in the short run than in the long run. In general, banks face fixed cost adjustments in order to adjust their rates in a timely manner (Hannan and Berger [1991]; Bondt [2002]). Therefore, in further studies, it is necessary to measure interest rate pass-through under varying cost conditions to see the level of pass-through more accurately. At the same time,

**Conclusion of chapter 5**

Chapter 5 summarizes the main results studied in Chapter 4, conducts monetary policy of the State Bank in the coming time and offers solutions on Agribank's interest rate policy in order to increase the level and speed of interest rate pass-through. At the same time, some limitations of the study and suggestions for future research directions are also given.

**REFERENCES**

VIETNAMESE DOCUMENTS

1. Report on business results of Agribank 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015.

2. Dinh Thi Thu Hong and Phan Dinh Manh, 2013. “Effectiveness of monetary policy through the interest rate transmission channel.” Journal of Development and Integration No. 12(22)- September-October 2013.

3. Nguyen Phi Lan, 2010. “Monetary transmission mechanism from the perspective of quantitative analysis”. Banking Magazine No. 18/2010.

4. Nguyen Thi Kim Thanh, 2011. “Interest rate policy: Theoretical and practical basis”, Banking Strategy Institute, State Bank.

5. Nguyen Thi Ngoc Trang and Nguyen Huu Tuan, 2014, “Monetary policy transparency and retail interest rate pass-through in Vietnam”, Journal of Development & Integration No. 15 (25) – March-April/ 2014.

6. VCBS Research and Analysis Department, “Macro Report and Stock Market 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015”.

ENGLISH DOCUMENT

1. Beng Soon Chong, Ming-Hua Liu, Keshab Shrestha, 2005. “ Monetary transmission via the administered interest rates channel”. Journal of Banking & Finance.

2. Bondt, 2002, “Retail bank interest rate pass-through: New evidence from the Euro area level”. Working paper No.136, European Central Bank Working Paper Series.

3. Gambacorta L and S Iannotti (2007): “Are there asymmetries in the response of bank interest rates to monetary shocks?”, Applied Economics.

4. Hannan, Timothy H. 1991. “Bank Commercial Loan Markets and the Role of Market Structure: Evidence from Surveys of Commercial Lending.” Journal of Banking and Finance.

5. Hofmann, B., & Mizen, P. (2004). “Interest rate pass-through and monetary transmission: Evidence from individual financial institutions' retail rates.”. Economica.

6. Kleimeier S., Sander H., 2005, “Expected versus unexpected monetary policy impulses and interest rate pass through in euro-zone's retail banking markets”. Journal of Banking and Finance.

7. Lim, GC (2001). “Bank interest rate adjustments: Are they asymmetric?” Economic Record.

8. Ming-Hua Liu, Dimitri Margaritis, Alireza Tourani-Rad, 2007 “Monetary policy transparency and pass-through of retail interest rates”, Journal Banking & Finance.

9. Rustam Jamilov, Balazs Egert (2014)," Interest rate pass-through and monetary policy asymmetry: A journey into the Caucasian black box", Journal of Asian Economics.

10. Scholnick, B. (1996) “Asymmetric Adjustment of Commercial Bank Interest Rates: Evidence from Malaysia and Singapore”. Journal of International Money and Finance.

The variables of deposit interest rate, lending interest rate

_1M | _6M | _12M | _18M | _24M | SMALL | TDH | |

Mean | 8.993021 | 9.666979 | 10.04052 | 9.738542 | 9.755000 | 12,98328 | 14.08740 |

Median | 8.140000 | 8,640000 won | 9,650000 won | 9,730000 won | 9,730000 won | 11.20000 won | 12.72500 |

Maximum | 17.50000 won | 17.50000 won | 17.50000 won | 17.50000 won | 17.50000 won | 21,00000 won | 21,00000 won |

Minimum | 4,000000 | 5.300000 won | 6,000000 | 6.2000000 | 6,30000 won | 9,000000 | 10,50000 won |

Std. Dev. | 3.844662 | 3.297293 | 3.038562 | 2.452714 | 2.403539 | 3.456668 | 3.257457 |

Skewness | 0.415382 | 0.649823 | 0.601143 | 0.728301 | 0.808288 | 0.832536 | 0.655379 |

Kurtosis | 2.016644 | 2.464302 | 2.605022 | 3.542912 | 3.690190 | 2.343457 | 2.082540 |

Jarque-Bera | 6.628637 | 7.904205 | 6.405992 | 9.665761 | 12.35871 | 12.81404 | 10.23927 |

Probability | 0.036359 | 0.019214 | 0.040640 | 0.007964 | 0.002072 | 0.001650 | 0.005978 |

Sum | 863.3300 | 928,0300 | 963.8900 | 934.9000 | 936.4800 | 1246,395 | 1352,390 |

Sum Sq. Dev. | 1404.235 | 1032.854 | 877.1215 | 571.5014 | 548.8148 | 1135,112 | 1008.047 |

Observations | 96 | 96 | 96 | 96 | 96 | 96 | 96 |

Maybe you are interested!

- Introduction To The Bank For Agriculture And Rural Development Of Vietnam
- Pass-Through From Rediscount Rate To Deposit And Lending Rates
- Choosing The Optimal Lag For The Variables In The Model Table 4.8: Optimal Latency Testing
- The transmission from the interest rate policy of the State bank to the deposit and lending rates at Bank for Agriculture and Rural Development of Vietnam - 7
- The transmission from the interest rate policy of the State bank to the deposit and lending rates at Bank for Agriculture and Rural Development of Vietnam - 8

Variables of refinancing interest rate, rediscount interest rate

Mean | TCV 9.119792 | Term 7.145833 |

Median | 8.000000 | 6,000000 |

Maximum | 150000 won | 13,00000 won |

Minimum | 6,50000 won | 4.50000 won |

Std. Dev. | 2.880739 | 2.937880 |

Skewness | 1.014121 | 1.023415 |

Kurtosis | 2.506139 | 2.491016 |

Jarque-Bera | 17.43066 | 17.79431 |

Probability | 0.000164 | 0.000137 |

Sum | 875.5000 | 686.0000 won |

Sum Sq. Dev. | 788.3724 | 819.9583 |

__Observations 96 96__

Correlation matrix

_1M _6M _12M _18M _24M Bank TDH TCV TCK

_1M 1 0.98600025... 0.97755807... 0.95944948... 0.96010052... 0.92831843... 0.88714445... 0.85451099... 0.85341449...

_6M 0.98600025... 1 0.98338146... 0.95805052... 0.95722028... 0.93106680... 0.89175930... 0.86680512... 0.86454221...

_12M 0.97755807... 0.98338146... 1 0.97135542... 0.96997002... 0.93104467... 0.90218586... 0.88115188... 0.88360978...

_18M 0.95944948... 0.95805052... 0.97135542... 1 0.99869664... 0.88771795... 0.85842502... 0.82539956... 0.81836423...

_24M 0.96010052... 0.95722028... 0.96997002... 0.99869664... 1 0.89112600... 0.85844532... 0.83071860... 0.82370299...

NH 0.92831843... 0.93106680... 0.93104467... 0.88771795... 0.89112600... 1 0.97820110... 0.89211298... 0.90256330...

TDH 0.88714445... 0.89175930... 0.90218586... 0.85842502... 0.85844532... 0.97820110... 1 0.86147700... 0.87114330...

TCV 0.85451099... 0.86680512... 0.88115188... 0.82539956... 0.83071860... 0.89211298... 0.86147700... 1 0.98795120...

TCK 0.85341449... 0.86454221... 0.88360978... 0.81836423... 0.82370299... 0.90256330... 0.87114330... 0.98795120... 1

1M

Null Hypothesis: _1M has a unit root Exogenous: Constant

Lag Length: 1 (Automatic - based on SIC, maxlag=12)

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -2.027167 0.2749

Test critical values: 1% level | -3.501445 | |

5% level | -2.892536 | |

10% level | -2.583371 | |

*MacKinnon (1996) one-sided p-values. | ||

6M | ||

Null Hypothesis: _6M has a unit root Exogenous: Constant Lag Length: 1 (Automatic - based on SIC, maxlag=12 | ) |

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -2.357899 0.1565

Test critical values: 1% level | -3.501445 | |

5% level | -2.892536 | |

10% level | -2.583371 | |

*MacKinnon (1996) one-sided p-values. | ||

12M | ||

Null Hypothesis: _12M has a unit root Exogenous: Constant Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) |

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -1.392710 0.5828

Test critical values: 1% level | -3,500669 | |

5% level | -2.892200 | |

10% level | -2.583192 | |

*MacKinnon (1996) one-sided p-values. | ||

18M | ||

Null Hypothes is : _18M has a unit root Exogenous : Cons tant Lag Length: 0 (Autom atic - bas ed on SIC, m axlag=12 | ) | |

t-Stats tic | Prob.* | |

Augm ented Dickey-Fuller tes ts tatis tic | -1.563726 | 0.4971 |

Test t critical values : 1% level | -3,500669 | |

5% level | -2.892200 | |

10% level | -2.583192 |

*MacKinnon (1996) one-s ided p-values .

LSHD 24M

Null Hypothesis: _24M has a unit root Exogenous: Constant

Lag Length: 0 (Automatic - based on SIC, maxlag=12)

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -1.615662 0.4707

Test critical values: 1% level | -3,500669 | |

5% level | -2.892200 | |

10% level | -2.583192 | |

*MacKinnon (1996) one-sided p-values. | ||

SMALL LSCV | ||

Null Hypothesis: NH has a unit root Exogenous: Constant Lag Length: 1 (Automatic - based on SIC, maxlag=12 | ) |

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -1.826436 0.3657

Test critical values: 1% level | -3.501445 | |

5% level | -2.892536 | |

10% level | -2.583371 | |

*MacKinnon (1996) one-sided p-values. | ||

LSCV TDH | ||

Null Hypothesis: TDH has a unit root Exogenous: Constant Lag Length: 1 (Automatic - based on SIC, maxlag=12 | ) |

t-Statistics Prob.*

Augmented Dickey-Fuller test statistic -2.066375 0.2587

Test critical values: 1% level | -3.501445 | |

5% level | -2.892536 | |

10% level | -2.583371 | |

*MacKinnon (1996) one-sided p-values. | ||

LSTCV | ||

Null Hypothesis: TCV has a unit root Exogenous: Constant Lag Length: 3 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -2.570517 | 0.1028 |

Test critical values: 1% level | -3.503049 | |

5% level | -2.893230 | |

10% level | -2.583740 |

*MacKinnon (1996) one-sided p-values.

Null Hypothesis: TCK has a unit root Exogenous: Constant Lag Length: 2 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -2.265776 | 0.1852 |

Test critical values: 1% level | -3.502238 | |

5% level | -2.892879 | |

10% level | -2.583553 | |

*MacKinnon (1996) one-sided p-values. | ||

D(1M) | ||

Null Hypothesis: D(_1M,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -12.58569 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 | |

*MacKinnon (1996) one-sided p-values. | ||

D(_6M) | ||

Null Hypothesis: D(_6M,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -11.58997 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 | |

*MacKinnon (1996) one-sided p-values. | ||

D(_12M) | ||

Null Hypothesis: D(_12M,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -15.07362 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 |

*MacKinnon (1996) one-sided p-values.

Null Hypothesis: D(_18M,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -14.64223 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 | |

*MacKinnon (1996) one-sided p-values. | ||

D(_24M) | ||

Null Hypothesis: D(_24M,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -14,86575 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 | |

*MacKinnon (1996) one-sided p-values. | ||

D(NH) | ||

Null Hypothesis: D(NH,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 2 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -7.787872 | 0.0000 |

Test critical values: 1% level | -4.062040 | |

5% level | -3.459950 | |

10% level | -3.156109 | |

*MacKinnon (1996) one-sided p-values. | ||

D(TDH) | ||

Null Hypothesis: D(TDH,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 0 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -12.64119 | 0.0000 |

Test critical values: 1% level | -4.059734 | |

5% level | -3.458856 | |

10% level | -3.155470 |

*MacKinnon (1996) one-sided p-values.

Null Hypothesis: D(TCV,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 1 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -10.39409 | 0.0000 |

Test critical values: 1% level | -4.060874 | |

5% level | -3.459397 | |

10% level | -3.155786 | |

*MacKinnon (1996) one-sided p-values. | ||

D(TCK) | ||

Null Hypothesis: D(TCK,2) has a unit root Exogenous: Constant, Linear Trend Lag Length: 2 (Automatic - based on SIC, maxlag=12 | ) | |

t-Statistics | Prob.* | |

Augmented Dickey-Fuller test statistic | -9.973895 | 0.0000 |

Test critical values: 1% level | -4.062040 | |

5% level | -3.459950 | |

10% level | -3.156109 |

*MacKinnon (1996) one-sided p-values.

**APPENDIX 03: ROAD INSPECTION**

1M_TCV

AR __DL__ Bounds Test

Date: 03/29/16 Time: 21:39 Sample: 5 96

Included observations: 92

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 19.3482 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

6M_TCV

AR __DL__ Bounds Test

Date: 03/29/16 Time: 21:43 Sample: 3 96

Included observations: 94

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 13.47206 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

12M_TCV

ARDL Bounds Test

Date: 03/29/16 Time: 21:45 Sample: 5 96

Included observations: 92

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 35.99821 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

24M_TCV

AR ~~DL~~ Bounds Test

Date: 03/29/16 Time: 21:47 Sample: 13 96

Included observations: 84

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 5.606299 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

NH_TCV

AR __DL__ Bounds Tes t

Date: 03/29/16 Time: 21:48 Sam ple: 6 96

Included obs ervations : 91

Null Hypothes is : No long-run relations hips exis t

Test t Stats tic | Value | k |

Fs tatis tic | 24.48493 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

1M_TCK | ||

ARDL Bounds Test |

Date: 03/29/16 Time: 21:50 Sample: 5 96

Included observations: 92

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 9.505849 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

6M_TCK | ||

AR |

Date: 03/29/16 Time: 21:53 Sample: 3 96

Included observations: 94

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 13.32612 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

18M_TCK | ||

ARDL Bounds Test |

Date: 03/29/16 Time: 21:54 Sample: 3 96

Included observations: 94

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 15.52214 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |

24M_TCK

ARDL Bounds Test

Date: 03/29/16 Time: 21:55 Sample: 14 96

Included observations: 83

Null Hypothesis: No long-run relationships exist

Test Statistic | Value | k |

F-statistics | 17.21293 | first |

Critical Value Bounds | ||

Significance | I0 Bound | I1 Bound |

ten% | 3.02 | 3.51 |

5% | 3.62 | 4.16 |

2.5% | 4.18 | 4.79 |

first% | 4.94 | 5.58 |