Financial Liberalisation in Emerging Markets: How Does Bank Lending Change?

Olaf Hübler, Lukas Menkhoff and Chodechai Suwanaporn

Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät

Abstract: Financial liberalisation has often failed in the past due to underestimated problems of structural change. We analyse such changes in lending behaviour of Thai commercial banks during a liberalisation phase by way of unique micro data. Liberalisation has expected positive effects, such as lowering the interest rate spread and collateral requirements. Liberalisation causes structural change, such as a decline in collateral-based and relationship banking. However, the liberalisation evidence is consistent with more risk taking, such as lending to more risky projects and less protection against default. The Thai experience suggests obvious policy lessons.

Keywords: financial liberalisation; lending decisions; emerging economies; Thailand (search for similar items in EconPapers)
JEL-codes: F30 G21 O16 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-05
New Economics Papers: this item is included in nep-ban and nep-sea
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Journal Article: Financial Liberalisation in Emerging Markets: How Does Bank Lending Change? (2008)
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