Thai financial crisis and capital control | |
| Author | Pimonrat Unganjanakul |
| Call Number | AIT RSPR no. SM-99-37 |
| Subject(s) | Financial crises--Thailand Capital--Thailand |
| Note | A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | In the early 1990 's Thailand embarked on a course of deregulation and financial liberalization starting with the acceptance of the Article 8 of the Articles of Agreement of the International Monetary Fund, phased in liberalization of capital flows, deregulation in the scope of operation of financial institutions, and partial entry of foreign competitors in the domestic financial system. This financial liberalization had led to massive capital inflows and helped the Thai economy to achieve high rates of growth until the occurrence of the financial crisis. In 1995, Thailand began the year with a slowdown of the economy. The trouble in the economy was ignited by the finance sector. The weakness of financial institutions coincided with the depression of property sector. The various problems occurring stemmed from excessive foreign debts through Bangkok International Banking Facilities (BIBF). The deterioration in the quality of the loans could be traced back to the rapid growth of real estate industry and the fast liberalization policy. Many economic indicators such as disappointing export growth and high current account deficit signaled the poor performance of Thai economy. This crisis appeared after the flotation of the baht in 1997. Heavy foreign debt and rapid growth of nonperforming loans of the financial institutions as well as political instability resulted in the decline of foreign investors' confidence to the currency which led to foreign capital outflows. This has paved the way to the problems of liquidity and eventually financial cns1s. This study will also cover the evolution of Thai financial crisis focus on the causes and impacts of this crisis. It also concentrates on the policy reactions and measures implemented by the Thai govenrn1ent in the period of the crisis . In addition, this research will also suggest recommendations of to policy makers both in the government sector and private sector. From the study, the major causes of the financial crisis were found to be: the decline of export growth, surges in capital flows, the widening current account deficit, the excessive foreign debt, the lessening of foreign reserves, international credit rating agency discredit, the sluggish property market, mismanagement of resources, political instability, including mismanagement and inefficient supervision of government. Recommendations made include: Thailand needs to strengthen the competitiveness of Thai products in the world market through greater investment in human resource development and research development activities, must reduce its reliance on foreign capital to finance activities not related to export orientation or import substitution, should promote the development of small and medium enterprises (SMEs) to provide employment to laid-off workers. In addition, the Bank of Thailand should overhaul its operations, placing focus on clearer and more efficient supervision too. |
| Year | 1999 |
| 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) | John, Tang C.S.; |
| Examination Committee(s) | Clemens, Bechter;Gupta, Jyoti Prakash; |
| Scholarship Donor(s) | Asian Institute of Technology Partial Scholarship; |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1999 |