Could Tighter Prudential Regulation Have Saved Thailand’s Banks?

Thomas Hartmann-Wendels and Lukas Menkhoff

No 281242, Discussion Papers from University of Bonn, Center for Development Research (ZEF)

Abstract: The improvement of prudential regulation in the crisis-ridden Asian countries is suggested by international organizations as a major lesson to be implemented. The effect from tighter regulation can be estimated by simulating the crisis with new rules. The analysis for Thailand's commercial banks shows that more effective prudential regulation could have lowered the impact from credit risks to some degree. More important for the financial meltdown were, however, certain macroeconomic risks. These are not covered by any existing regulatory arrangements. Consequently, even many tightly regulated German banks would not survive a macroeconomic shock as happened in Thailand.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 40
Date: 2000-06
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ubzefd:281242

DOI: 10.22004/ag.econ.281242

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