| Author | Zhou, Hongjin |
| Call Number | AIT RSPR no. SM-02-53 |
| Subject(s) | Loans--Thailand
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| Note | A research study submitted in paitial fulfillment of the requirements for the degree of Master of Business Administration, School of Management |
| Publisher | Asian Institute of Technology |
| Series Statement | Research studies project report ; no. SM-02-53 |
| Abstract | Non-perf01ming loans (NPLs) have become a primary hurdle for the sustained growth of Thailand's economy. The failing circle of borrowers' repaying interests and principals in due time and lenders collecting them has intrigued many a financial economist since the problem affected seriously on Thailand during the Financial Crisis. Thailand's systematic insolvency failure in financial and corporate sectors came to such a scale that one single large government agency or one influential bank/corporate, or even a few number of chief market participants will not be able to resolve the problem. Liquidity was reduced eno1mously; lending became difficult, though savings rate remained high; potentially profitable projects stood still for the lack of fund, while bankers dared not to risk for the fear of the comeback ofNPLs. This paper was conducted with three purposes. Firstly, it aims to analyze the evolution of NPLs. The reasons, causes, and process that NPLs emerged from trivial amount to that accounts for almost half of the national loans outstanding. Secondly, it aims to examine the resolutions measures taken to tackle the problem. The dilemmas that each resolution approach faces and the effects are discussed. Thirdly, recommendations of long-term eliminating NPLs are provided to governments, banks, and the TAMC. NPLs have evolved in the good years when economy was growing fast and bad loans had not caught much attention yet. Thailand's unbalanced and unregulated financial liberalization program coupled with the persisting Thai cronyism in banking and corporate sectors largely created a permitting environment for speculative loans without adequate banks' due diligence conducted These loans mostly ended as non-performing. Thai government has implemented various programs to tackle the NPLs. The FIDF was functional as an emergency rescue plan in keeping the economy afloat. However, the generous national guarantee of the liquidity by the government in a long run is not a sustainable approach. Corporate debt restructuring program gave some of the corporate breathing rooms and released the pressures brought by the Crisis; however, procrastinations in solving NPLs might also occur in the unchecked reshucturing. TAMC made a further step in cleaning up NPLs' ratio by transferring bad loans out of banks; while the major threat for Thailand is how to resolve the NPLs quickly piling up high in TAMC. Thailand needs a fundamental transformation in the financial system to develop a risk and value based credit ·culture. Besides other methods and proposals are necessary in alleviating the immediate crisis induced pressures, a cultivation of appreciation modem financial analysis will stall NPLs from coming back in a long run. |
| Year | 2002 |
| Corresponding Series Added Entry | Asian Institute of Technology. Research studies project report ; no. SM-02-53 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Tang, John C.S.; |
| Examination Committee(s) | Ramachandran, N.;Singha Chiamsiri;Gupta, J.P.; |
| Scholarship Donor(s) | Government of People's Republic of China; |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 2002 |