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Financial Structure and Monetary Policy in Thailand

  • S. Y. Lee
  • Y. C. Jao
Chapter

Abstract

The present financial system comprises the Bank of Thailand (central bank), 30 commercial banks (Appendix 3), the Industrial Finance Corporation of Thailand (IFCT), the Bank for Agriculture and Agricultural Co-operatives (BAAC), the Government Savings Bank, the Government Housing Bank, 129 finance and securities companies, 28 credit foncier companies, and 73 insurance companies. The informal money market includes numerous pawnshops, and money lenders.

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Notes and References

  1. 1.
    See Bank of Thailand, Statistical Bulletin, September 1979, pp. 2–3 and 8–9, for, ‘Consolidated Statement of the Monetary System’ and ‘The Assets and Liabilities of the Bank of Thailand’.Google Scholar
  2. 2.
    Sa-Ngoh Punnarugsa estimated that the profit rate after tax of commercial banks in Thailand was about 16 per cnt in 1970–2. Generally speaking, banking business in Thailand is very profitable because of the favourable circumstances and the restricted entry. See Sa-Ngoh Punnarugsa, ‘Profitability of Commercial Banks in Thailand’, in Prateep Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, Essays in Honour of Khunying Suparb Yossundara (Bangkok: Sompong Press, 1975), pp. 82–5.Google Scholar
  3. 5.
    Liquid assets include cash in hand, balances at the Bank of Thailand, balances at other non-commercial banks in Thailand, bank balances abroad, gold and unobligated government securities. See Bank of Thailand, Statistical Bulletin, September 1979, p. 16.Google Scholar
  4. 8.
    See Bank of Thailand, Annual Economic Report, 1978, pp. 77–8.Google Scholar
  5. 10.
    In an econometric study of the bank portfolio behaviour in 1962–73, Dr. Nimit Nontapunthawat concludes that the positive response to demand is strong in cases of demand in manufacturing, banking, insurance and real estate, service and wholesale and retail trade sectors, but particularly weak in the agricultural, mining and quarrying sectors. See Nirnit Nontapunthawat, ‘Finance Capital Flows and Portfolio Behaviour of Thai Commercial Banks’, Journal of the National Research Council of Thailand, Vol. 12, No. 1, January–June 1980, pp. 1 and 2.Google Scholar
  6. 17.
    See the Industrial Finance Cooperation of Thailand, Annual Report, 1978, p. 56;Google Scholar
  7. and Bank of Thailand, Statistical Bulletin, September 1979, Table 17, ‘Assets and Liabilities of Industrial Finance Corporation in Thailand, 1961–1979’, pp. 26–7.Google Scholar
  8. 18.
    See Bank of Thailand, Statistical Bulletin, September 1979, Table 18, ‘Assets and Liabilities of Bank for Agriculture and Agricultural Co-operatives’, pp. 28–9.Google Scholar
  9. 19.
    Quoted from Bank of Thailand, Annual Economic Report, 1977, p. 79.Google Scholar
  10. 20.
    Quoted from Bank of Thailand, Annual Economic Report, 1978, pp. 82–3.Google Scholar
  11. 21.
    At the end of 1978, total deposits amounted to B15,563 million; and savings and premium saving bonds, B1,683 million. The Bank acquired government securities of about B17,602 million. Both the Savings Department and Banking Department accept demand and time deposits. See Bank of Thailand, Monthly Bulletin, September 1979, Table 16, ‘Assets and Liabilities of the Government Savings Bank’, pp. 24–5 and 31;Google Scholar
  12. and the Government Savings Bank of Thailand, History and Activities in Brief, 1978.Google Scholar
  13. 22.
    See Bank of Thailand, Annual Economic Report, 1977, p. 83;Google Scholar
  14. and Government Housing Bank, Annual Report, 1977 and 1978.Google Scholar
  15. 23.
    Prof. Robinson suggested the following: 1. Tax incentives to public companies and shareholders. 2. Standard accounting and auditing system. 3. Improvement of the efficiency of market management. 4. Control of all financial institutions. See Bangkok Bank, Monthly Review, June 1975, pp. 370–3.Google Scholar
  16. 24.
    Bank of Thailand, Annual Economic Report, 1978, p. 86.Google Scholar
  17. 25.
    The baht was pegged to the US dollar until May 1978, and its value is now fixed daily to a basket of currencies by the Exchange Equalisation Funds of Thailand, in collaboration with commercial banks. The change was intended to produce greater flexibility in the financial system. See Bank of Thailand, Annual Economic Report, 1978, p. 72.Google Scholar
  18. 26.
    See P. B. Trescott, Thailand’s Monetary Experience: The Economics of Stability (New York: Praeger, 1971);Google Scholar
  19. and T. H. Silcock, Thailand: Social and Economic Studies in Development (Canberra: Australian National University Press, 1967).Google Scholar
  20. 32.
    To be more precise by analysis on quarterly basis, the growth rate of money supply, M1 can be summarised as follows: See Federal Reserve Bank of San Francisco, Pacific Basin Economic Indicators, June 1980, p. 69.Google Scholar
  21. 33.
    See Bank of Thailand, Statistical Bulletin, September 1979, Table III 13, ‘International Reserves’, p. 80. In 1971 and 1978, the revaluation of gold holdings at market price may explain this phenomenon of exception.Google Scholar
  22. 34.
    See Bank of Thailand, Annual Economic Report, 1978 Statistical Section, p. 8, Table 6, ‘Analysis of Changes in Money Supply’, item (6) foreign assets (net).Google Scholar
  23. 36.
    See Chaiyawat Wibulswasdi, ‘A Study of Demand for New Currency Notes in Thailand’, Bank of Thailand Paper No. 2, September 1974; Nimit Nontapunthawat, ‘Financial Capital Flows and Portfolio Behaviour of Thai Commercial Banks’, Journal of National Research Council of Thailand, Vol. 12, No. 1, January–June 1980;Google Scholar
  24. and Sathit Uthaisri, ‘Monetary Policy in Thailand: A Test of Its Effectivness’, Ph. D. thesis submitted to the University of Illinois, USA, 1973; and Warin Wonghanchao, ‘An Evaluation of Thailand’s Monetary Policy in the 1960’s’, in Prateep Sondysuvan (ed.), Finance, Trade and Economic Development in Thailand, pp. 99–114.Google Scholar

Copyright information

© S.Y. Lee and Y.C. Jao 1982

Authors and Affiliations

  • S. Y. Lee
    • 1
  • Y. C. Jao
    • 2
  1. 1.National University of SingaporeSingapore
  2. 2.University of Hong KongChina

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