Transition from black to official markets for foreign exchange in Myanmar

Koji Kubo

No 511, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: We address the puzzle why the black market for foreign exchange thrives in Myanmar despite the successful unification of multiple exchange rates. A closer look at the black market reveals that its enduring competitiveness stems from its lower transaction costs. A question arising from this observation is how the official market, namely banks, can compete with and replace the black market. Our empirical analysis based on an original questionnaire survey of private export firms regarding their choices of currency trading modes suggests that banks can attract exporters by exploiting the economies of scope between currency trading and lending.

Keywords: Myanmar; Foreign exchange; Banks; Informal finance; Exports; Exchange rate unification; Black market for foreign exchange; Economies of scope in banking (search for similar items in EconPapers)
JEL-codes: E26 O24 O53 (search for similar items in EconPapers)
Date: 2015-03-01
New Economics Papers: this item is included in nep-mac, nep-mon and nep-sea
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 511. 2015-03-01

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