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Debt Market Regulation and the Impact of Thailand'S 1997 Economic Crisis

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  • Michael Lion
  • Ralf Zurbruegg

Abstract

This paper examines the behaviour of Thailand's bank debt market during the onset of the 1997 economic crisis. By obtaining an estimate of the currency and country risk premia in this market, a picture of investor expectations is formed which demonstrates that the market failed to react speedily to the float of the baht and the subsequent turmoil which was associated with the onset of the crisis. These tests also demonstrate the effects of the regulatory conditions in Thailand's financial sector through their distortion of the market mechanism which led to distorted bank debt rates. A number of policy considerations are then discussed in light of this.

Suggested Citation

  • Michael Lion & Ralf Zurbruegg, 2001. "Debt Market Regulation and the Impact of Thailand'S 1997 Economic Crisis," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 6(3), pages 386-402.
    • Handle: RePEc:taf:rjapxx:v:6:y:2001:i:3:p:386-402
    DOI: 10.1080/13547860120097403
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    References listed on IDEAS

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    1. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "What caused the Asian currency and financial crisis?," Japan and the World Economy, Elsevier, vol. 11(3), pages 305-373, October.
    2. Sachs, Jeffrey & Tornell, Aaron & Velasco, Andres, 1995. "The Collapse of the Mexican Peso: What Have We Learned?," Working Papers 95-22, C.V. Starr Center for Applied Economics, New York University.
    3. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part I: A Macroeconomic Overview," NBER Working Papers 6833, National Bureau of Economic Research, Inc.
    4. Giancarlo Corsetti & Paolo Pesenti & Nouriel Roubini, 1998. "What Caused the Asian Currency and Financial Crisis? Part II: The Policy Debate," NBER Working Papers 6834, National Bureau of Economic Research, Inc.
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