A feasibility study of the privatization of the Bank of Taiwan (BOT) | |
| Author | Liu, Kuo-pin |
| Call Number | AIT RSPR no. SM-99-67 |
| Subject(s) | Privatization--Taiwan Banks and banking--Taiwan |
| Note | A research submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | Reviewing the history of Taiwan economic development, state-owned enterprises (SOEs) have been playing an active and key role in the primary stage of economic development. However, it has generally been argued that most of SOEs are defined by inefficiency and . destroying market mechanism. To overcome the problems associated with SOEs, many countries have adopted privatization as a policy to achieve management efficiency, generate revenues and reduce fiscal deficits. Indeed, privatization has appeared to bring about a favorable impact upon restructuring the national economy in coping with globalization and liberalization. However, how the government goes about implementing this world trend is different from country to country. For the past five decades, Taiwan's banking industry was controlled by the government to maintain economic growth and financial stability. In 1991, the Ministry Of Finance (MOF) approved the establishment of fifteen new private commercial banks, which commenced operations in December 1991. Henceforth, the monopoly of Taiwan's banking industry, which had been dominated by twelve state-owned banks, became a part of history. Under the changing circumstances, the Bank Of Taiwan (BOT) has to face challenges from not only external competitions, but also strict internal regulations. After some state-owned banks were successfully privatized in 1998, the privatization of BOT seems to be the next logical goal of Taiwan government. However, it still has many technical and political obstacles standing in the path of BOT privatization. How to deal with these obstacles will be a critical task in the company's future development. Through in-depth interviews with interest groups involved in BOT privatization, the major findings of this study are: First, banking privatization should be speeded up so as to intensify banking competition and improve service quality. Secondly, this study finds that the banking privatization is not merely a remedy to the economic problem but a by-product of political reform. In other words, supports by both the central government and the interest groups are necessary for a successful privatization. Thirdly, the study finds that the long-term benefits by BOT privatization will be larger than the short-term costs. However, the lingering legislation and government's negative attitude have led BOT privatization into uncertainty. Therefore, it is critical to set a concrete timetable for eliminating potential obstacles of BOT privatization. A fourth major finding of this study suggests that if BOT can not be privatized for the time being, the government, at least, should rid itself of the constrictive management system through negotiating with legislators to pass the draft of "Statute for Governing State-Owned Financial Institutions". Once the "Statute" is passed, BOT would be able to conduct business with managerial autonomy, as well as compete with private rivals under a fairly competitive circumstance. |
| Year | 1999 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management (SOM) |
| 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) | Swierczek, Fredric W.;Bechter, Clemens |
| Scholarship Donor(s) | Taiwan Provincial Government |
| Degree | Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1999 |