Developing an Early Warning System for Financial Crises in Vietnam

Tristan Nguyen and Nguyen Ngoc Duy

Asian Economic and Financial Review, 2017, vol. 7, issue 4, 413-430

Abstract: In this paper, we develop an applicable early warning model that can predict financial crises for Vietnam. To achieve this goal, we analyze and extend the existing early warning models which have been developed by Kaminsky et al. (1998); Goldstein et al. (2000) and Edison (2003) by using the signal approach. The model observes several indicators (signals) that tend to have an unusual behavior in the periods preceding a financial crisis. When an indicator exceeds or falls below a given threshold, then it sends a “signal” that a financial crisis might occur within a certain period (12 or 24 months). We use 14 most relevant indicators to predict potential crises in Vietnam’s economy. In terms of practice, policy makers should have better insights about the vulnerability of the economy in order to recognize financial crises at an earlier stage. Therefore, the authors offer some recommendations for policy makers how to achieve the highest efficiency in warning and preventing future financial crises in Vietnam.

Keywords: Early warning system; Financial crisis; Emerging markets; Vietnam’s economy; Signal approach model; Crisis prediction. (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://archive.aessweb.com/index.php/5002/article/view/1565/2247 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:asi:aeafrj:v:7:y:2017:i:4:p:413-430:id:1565

Access Statistics for this article

More articles in Asian Economic and Financial Review from Asian Economic and Social Society
Bibliographic data for series maintained by Robert Allen ().