On the rationale of bank lending in pre-crisis Thailand

Lukas Menkhoff and Chodechai Suwanaporn

Applied Economics, 2007, vol. 39, issue 9, 1077-1089

Abstract: Evidence from credit files is provided to examine bank lending determinants of Thai commercial banks. Their lending practice follows reasonable patterns as a standard set of variables, including indirect risk variables, explains much of the variance in interest rate spread. Reflecting institutional differences with mature markets, we find a higher importance of relationship banking and risk control via credit availability. Information about later default reveals prudent relationship lending. However, banks could have made better use of available information about borrowers' riskiness. These findings do not support a general verdict of bad banking but indicate room to improve lending decisions.

Date: 2007
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Related works:
Working Paper: On the Rationale of Bank Lending in Pre-Crisis Thailand (2005)
Working Paper: THE RATIONALE OF BANK LENDING IN PRE-CRISIS THAILAND (2003)
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DOI: 10.1080/00036840500447815

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