Analysing advantages and disadvantages of banking reforms in Mekong countries in comparative perspective
Introduction
In a number of transition economies the banking systems are at different stages of the transformation process from mostly planned to market economy structures. But the past two decades led to further distinctions in developments within these countries. This paper will review recent banking reform efforts in the lower Mekong countries (LMCs), including Cambodia, the Lao People’s Democratic Republic, and Vietnam. Associated by close economic and cultural links, the three LMCs have tackled the challenges of both economic development and transition to more market-based economies. These links are apparent as they are some of the countries that make up the Greater Mekong Subregion (GMS) which is a natural economic area bound together by the Mekong River. In 1992, with the assistance from the Asian Development Bank (ADB), these countries entered into a program of subregional economic cooperation designed to enhance economic relations among them.
It is important to explain the economies of these countries to lay the grounds for analysis of banking reforms. It has become clear that increasingly, modernization and industrialization are emerging from a process of transition and transformation. The Mekong countries are gradually shifting from subsistence farming to more diversified economies, and to more open, market-based systems. In parallel with this are the growing commercial relations among these countries, mainly in terms of cross-border trade, investment, and labor mobility. It is fair to say that the rich human and natural resource endowments of the Mekong region have made it a new frontier of Asian economic growth. Indeed, the Mekong region has the potential to be one of the world's fastest growing areas.
Unlike market economies, in centrally planned