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Competition Stability and Financial Crisis in Thai Banking Sector

Author

Listed:
  • Anirut PISEDTASALASAI

    (Department of Banking and Finance Chulalongkorn Business School Chulalongkorn University Bangkok Thailand)

  • Karnsiree RUJIRATPICHATHORN

    (Department of Banking and Finance Chulalongkorn Business School Chulalongkorn University Bangkok Thailand)

Abstract

This paper studies the trend of competition in banking industry in Thailand from 1992 to 2013 Furthermore we investigate whether the change in the competition environment has any impacts on the financial stability of the banking system First we find that the competition level was volatile in the 1990s but became much more stable over the last 7 years Secondly our result suggests that the degree of competition in banking industry destabilizes the financial system due to equity capital reduction higher banks risk taking behavior and banks probability of default However by taking the 1997 Asian financial crisis into account an increasing competition level after 1998 produces less negative effect to insolvency risk compared with the before crisis period and the impacts of competition on banks equity capital and risk taking behavior have started disappearing since then due to developments in financial market which diminish the loan market shares and increase portfolio diversification as well as the financial reforms in following years after the severe financial crisis

Suggested Citation

  • Anirut PISEDTASALASAI & Karnsiree RUJIRATPICHATHORN, 2017. "Competition Stability and Financial Crisis in Thai Banking Sector," Journal of Advanced Studies in Finance, ASERS Publishing, vol. 8(1), pages 5-18.
    • Handle: RePEc:srs:jasf00:v:8:y:2017:i:1:p:5-18
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    Cited by:

    1. Ahmed Nahar Al Hussaini, 2019. "Credit Risk and Financial Stability Under Controlling Effect of Financial Sector Development: A Study from Banking Sector of GCC Members," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 9(1), pages 122-138, January.

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