Developing the Efficient and Resilient Financial System for Thailand: Lessons from the Crisis and Challenges Ahead
The purpose of this paper is to discuss and raise important policy implications from the U.S. crisis in the Thai context, so as to contribute to the appropriate and forward-looking policy design for the Thai financial. Issues discussed in this study involve: (i) financial linkages and systemic risk assessment; (ii) procyclicality of the financial system; (iii) appropriate regulatory arrangement, bank governance and executive compensation. Regarding the systemic risk issue, we found evidence of negative externalities imposed onto the banking system value-at-risk (VaR) by banks and other types of financial institutions such as finance, securities and insurance companies. Therefore, bank regulators needs to be aware of the additional risk imposed onto the system during distress time and take this into account when assessing the risk level of banks. Next, the results from panel data regressions suggested that the level of procyclicality decreased from the pre-Asian Crisis period when compared to the post-crisis period. Moreover, the nature of cyclicality differed by asset classes. Therefore, we proposed that, if their goal was to mitigate excessive cyclicality, supervisors must also take into account types of loans as well. Finally, the paper outlines the importance of implementing regulatory statues that will minimize regulatory arbitrage as well as promoting cautious financial innovations and bank governance, which were identified as a few of the fundamental causes leading to the onset of the U.S. financial crisis.
|Date of creation:||Apr 2009|
|Contact details of provider:|| Postal: 273 Samsen Road, Bangkhunprom, Bangkok|
Phone: (662) 283-5353
Fax: (662) 280-0449
Web page: http://www.bot.or.th/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caroline Fohlin, 1998.
"Relationship Banking, Liquidity, and Investment in the German Industrialization,"
Journal of Finance,
American Finance Association, vol. 53(5), pages 1737-1758, October.
- Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers 913, California Institute of Technology, Division of the Humanities and Social Sciences.
- Carlo Brambilla & Giandomenico Piluso, 2007. "Are Banks Procyclical? Evidence from the Italian Case (1890-1973)," Department of Economics University of Siena 523, Department of Economics, University of Siena.
- Gabriel Jiménez & Jesús Saurina, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," International Journal of Central Banking, International Journal of Central Banking, vol. 2(2), May.
- Gabriel Jiménez & Jesús Saurina, 2005. "Credit cycles, credit risk, and prudential regulation," Working Papers 0531, Banco de España;Working Papers Homepage.
- Jesus, Saurina & Gabriel, Jimenez, 2006. "Credit Cycles, Credit Risk, and Prudential Regulation," MPRA Paper 718, University Library of Munich, Germany.
- Claudio Borio & Mathias Drehmann, 2009. "Assessing the risk of banking crises - revisited," BIS Quarterly Review, Bank for International Settlements, March.
- Benmelech, Efraim & Dlugosz, Jennifer, 2009. "The alchemy of CDO credit ratings," Journal of Monetary Economics, Elsevier, vol. 56(5), pages 617-634, July.
- Efraim Benmelech & Jennifer Dlugosz, 2009. "The Alchemy of CDO Credit Ratings," NBER Working Papers 14878, National Bureau of Economic Research, Inc.
- Gianni De Nicolo & Myron L. Kwast, 2001. "Systemic risk and financial consolidation: are they related?," Finance and Economics Discussion Series 2001-33, Board of Governors of the Federal Reserve System (U.S.).
- Jan Kregel, 2008. "Using Minsky's Cushions of Safety to Analyze the Crisis in the U. S. Subprime Mortgage Market," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 37(1), pages 3-23, April.
- Rungporn Roengpitya & Phurichai Rungcharoenkitkul, 2010. "Measuring Systemic Risk And Financial Linkages In The Thai Banking System," Working Papers 2010-02, Monetary Policy Group, Bank of Thailand.
- Martin Hellwig, 1995. "Systemic Aspects of Risk Management in Banking and Finance," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(IV), pages 723-737, December.
- Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
- Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-419, June.
- Jean-Charles Rochet & Jean Tirole, 1996. "Interbank lending and systemic risk," Proceedings, Board of Governors of the Federal Reserve System (U.S.), pages 733-765.
- Rochet, Jean-Charles & Tirole, Jean, 1996. "Interbank Lending and Systemic Risk," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 733-762, November.
- Markus Staub, 1998. "Inter-Banken-Kredite und systemisches Risiko," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 134(II), pages 193-230, June.
- Ben Cohen & Eli Remolona, 2008. "The Unfolding Turmoil of 2007–2008: Lessons and Responses," RBA Annual Conference Volume,in: Paul Bloxham & Christopher Kent (ed.), Lessons from the Financial Turmoil of 2007 and 2008 Reserve Bank of Australia.
- Xavier Freixas & Jean-Charles Rochet, 1997. "Microeconomics of Banking," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061937, January.
- Robert A. Eisenbeis, 1997. "International settlements: a new source of systemic risk?," Economic Review, Federal Reserve Bank of Atlanta, issue Q 2, pages 44-50. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:bth:wpaper:2009-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pornpinun Chantapacdepong)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.