TY - JOUR
T1 - Recapitalization of Thailand's banks after the 1997 crisis
T2 - Interpretation and critique from a neo-institutional perspective
AU - Cheung, Michael Tow
AU - Liao, Ziqi
N1 - Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2005/9
Y1 - 2005/9
N2 - The recapitalization of Thailand's banks following the 1997 crisis is interpreted and positively criticized from the perspective of neo-institutional theory. Although a recapitalization scheme was introduced as part of monetary policy in 1998, the statistics and critical reaction on the part of private interests suggest that public resources and administrative action would not suffice to fully and expeditiously fulfill this task. To increase the supply of private capital to the banking sector the authorities can most effectively adopt a neo-institutional philosophy, under which policy credibility in situations of financial distress is enhanced by the clarification of property rights and minimization of opportunities for special-interest action. Neo-institutional theory also suggests that it is possible to expedite overall monetary recovery if the government concentrates on its comparative advantage in supplying the public good of financial stability, and leave commercial banks free to realize private comparative advantage in areas such as restructuring, re-engineering, mergers and competition. To link public and private action in the areas noted above, initiatives can be introduced to cooperatively exploit relative efficiency in obtaining and using information to support decision-making.
AB - The recapitalization of Thailand's banks following the 1997 crisis is interpreted and positively criticized from the perspective of neo-institutional theory. Although a recapitalization scheme was introduced as part of monetary policy in 1998, the statistics and critical reaction on the part of private interests suggest that public resources and administrative action would not suffice to fully and expeditiously fulfill this task. To increase the supply of private capital to the banking sector the authorities can most effectively adopt a neo-institutional philosophy, under which policy credibility in situations of financial distress is enhanced by the clarification of property rights and minimization of opportunities for special-interest action. Neo-institutional theory also suggests that it is possible to expedite overall monetary recovery if the government concentrates on its comparative advantage in supplying the public good of financial stability, and leave commercial banks free to realize private comparative advantage in areas such as restructuring, re-engineering, mergers and competition. To link public and private action in the areas noted above, initiatives can be introduced to cooperatively exploit relative efficiency in obtaining and using information to support decision-making.
KW - 1997 financial crisis
KW - Commercial banks
KW - Neo-institutional policies
KW - Property rights
KW - Recapitalization
KW - Thailand
UR - http://www.scopus.com/inward/record.url?scp=23144437854&partnerID=8YFLogxK
U2 - 10.1080/13602380500068375
DO - 10.1080/13602380500068375
M3 - Journal article
AN - SCOPUS:23144437854
SN - 1360-2381
VL - 11
SP - 411
EP - 427
JO - Asia Pacific Business Review
JF - Asia Pacific Business Review
IS - 3
ER -