Experience of Asian Asset Management Companies: Do They Increase Moral Hazard? Evidence from Thailand

Akiko Terada-Hagiwara () and Gloria Pasadilla ()
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Akiko Terada-Hagiwara: Asian Development Bank
Gloria Pasadilla: Philippine Institute for Development Studies

No 55, ADB Economics Working Paper Series from Asian Development Bank

Abstract: This paper examines the performance of Asian asset management companies (AMCs). The analysis reveals that AMCs vary in their design and performance. The paper claims that AMCs can trigger moral hazard-induced bank lending. Empirical examination of the Thai experience of AMCs reveals that moral-hazard induced bank lending resulted in creating more new nonperforming loans (NPL) in the case of public AMCs. On the other hand, the centralized Thai Asset Management Company decreases the new NPL ratio, suggesting that this centralized AMC provokes no adverse moral hazard effect on financial institutions.

Keywords: asset management companies; bank lending; financial institutions; moral hazard; nonperforming loans (search for similar items in EconPapers)
JEL-codes: G23 G28 G33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-09-01
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0055

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