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Transition from black to official markets for foreign exchange in Myanmar

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  • Kubo, Koji

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.

Suggested Citation

  • Kubo, Koji, 2015. "Transition from black to official markets for foreign exchange in Myanmar," IDE Discussion Papers 511, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper511
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Myanmar; Foreign exchange; Banks; Informal finance; Exports; Exchange rate unification; Black market for foreign exchange; Economies of scope in banking;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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