ABSTRACT
The unexpected coincidence of restrictive financial policy and falling inflation on the one hand and high growth on the other can be interpreted as a reaction to the removal of repressive conditions that had restricted growth but given the Vietnamese economy a - one-time - efficiency gain. The reform of numerous financial systems has shown that the two tasks - financing growth and stabilization - are inseparably linked and that abrupt attempts at liberalization may easily have destabilizing effects. The credit requirements of family firms and farms, the retail trade and informal trade and industry were met by the informal financial sector, i.e. money-lenders, friends and relatives and local savings and credit rings, such as the hui system, which is based on Chinese models. In 1995 the state-owned enterprises absorbed only about 50% of the commercial banks’ volume of credit. The reform of the financial sector in a transforming economy primarily means institution-building.
