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Full-Text Articles in Business
Thailand: Reserve Requirements, Afc, Ezekiel Vergara, Corey N. Runkel
Thailand: Reserve Requirements, Afc, Ezekiel Vergara, Corey N. Runkel
Journal of Financial Crises
Following years of growth, the Thai economy began showing confidence-busting signs in 1996, including a liquidity crunch. In May 1997, the Bank of Thailand (BOT) announced that it would expand the list of short-term assets that banks and finance companies could use to satisfy the BOT’s liquidity reserve requirement, including obligations of the Financial Institution Development Fund (FIDF), which provided liquidity support to illiquid financial institutions. In the summer of 1997, the BOT suspended the operations of 58 finance companies and floated the Thai baht (THB), unleashing the Asian Financial Crisis (AFC). Tight liquidity conditions continued and, in September 1997, …
Malaysia: Reserve Requirements, Afc, Bailey Decker
Malaysia: Reserve Requirements, Afc, Bailey Decker
Journal of Financial Crises
Bank Negara Malaysia (BNM) unpegged the ringgit in July 1997, days after Thailand floated the baht. Ringgit depreciation and adverse investor sentiment worsened, contributing to a domestic liquidity shortage and capital flight. Malaysia experienced market instability in the early months of 1998, particularly pressure on its exchange rate, foreign currency reserves, and interest rates. At the same time, disruptions in the domestic money market and loan intermediation process caused an increase in lending rates, which resulted in debt servicing problems and weakened financial stability. To facilitate lending and productive economic activity, BNM twice lowered the statutory reserve requirement (SRR) at …
Thailand: Fidf Blanket Guarantee, 1997, Ayodeji George
Thailand: Fidf Blanket Guarantee, 1997, Ayodeji George
Journal of Financial Crises
The Thai government’s decision to allow the baht to float in July 1997 was the pivotal event of the Asian Financial Crisis. The baht fell 20% by the end of the month, further pressuring Thai financial institutions that had borrowed heavily in US dollars and other foreign currencies. In early August, Thailand’s Finance Minister and the Bank of Thailand (BOT) announced the suspension and restructuring of insolvent finance companies and a blanket guarantee covering depositors and creditors of all domestic banks and the remaining finance companies, administered by the BOT’s Financial Institutions Development Fund (FIDF). However, the blanket guarantee was …
Thailand: Financial Institutions Development Fund Liquidity Support, Corey N. Runkel
Thailand: Financial Institutions Development Fund Liquidity Support, Corey N. Runkel
Journal of Financial Crises
International investors launched three speculative attacks on the Thai baht in 1996 and 1997 following one high-profile banking failure, constant departures from the Bank of Thailand (BOT), and slumping returns on stocks and real estate. Though the BOT succeeded in the baht’s defense, the BOT’s depleted reserves were unable to fend off domestic troubles that emerged in early 1997. The speculative attacks increased the cost of foreign-denominated debt—which accounted for 18% of all bank lending—and forced up interbank lending yields. The decade-long boom in foreign capital inflows had generally overvalued assets, and banks found themselves in need of outside financing …
Thailand Capital Support Facilities 1998, Adam Kulam
Thailand Capital Support Facilities 1998, Adam Kulam
Journal of Financial Crises
After the floatation of the baht on July 2, 1997, the Thai economy endured a financial crisis from massive currency devaluation, exchange rate losses, and non-performing loans (NPLs). In response, the Thai government employed two types of restructuring programs: (1) the alleviation of NPLs and distressed assets, (2) the correction of financial institution insolvency and capital inadequacy. To help recapitalize private institutions with public funds, the government introduced tier-1 and tier-2 capital support facilities. The tier-1 facility aimed to attract private capital, and the tier-2 facility aimed to stimulate lending and corporate debt restructuring. Capital injections took the form of …
Indonesia: Ibra’S Asset Management Unit/ Asset Management Of Credits, Ariel Smith, Sharon M. Nunn
Indonesia: Ibra’S Asset Management Unit/ Asset Management Of Credits, Ariel Smith, Sharon M. Nunn
Journal of Financial Crises
In 1998, Indonesia’s banking sector was undercapitalized, under regulated, and suffering from an excess of nonperforming loans (NPLs). In response, the Indonesian government devised the Indonesian Bank Restructuring Agency (IBRA) and its Asset Management Unit/Asset Management of Credits (AMU/AMC) as part of a three-pronged government emergency plan, along with a blanket guarantee of the debts of all domestic banks and a framework for corporate restructuring. The AMU/AMC acquired and managed nonperforming loans from a variety of Indonesian banks and attempted to dispose of them. The AMU/AMC had acquired nearly IDR 400 trillion (approximately $86 billion) in face value of loans …
Korea Asset Management Corporation (Kamco): Resolution Of Nonperforming Loans In South Korea, Pascal Ungersboeck, Sharon M. Nunn
Korea Asset Management Corporation (Kamco): Resolution Of Nonperforming Loans In South Korea, Pascal Ungersboeck, Sharon M. Nunn
Journal of Financial Crises
During the 1997 Asian Financial Crisis, international capital outflows created a liquidity crisis for Korean financial institutions that had relied on foreign short-term borrowing. Korean financial institutions also faced high levels of nonperforming loans (NPLs) following years of rapid credit growth. The government mandated that the Korea Asset Management Corporation (KAMCO) purchase NPLs from banks over a five-year period starting in November 1997. By November 2002, the agency had acquired NPLs with a total face value of KRW 110.2 trillion ($88.2 billion) for KRW 39.8 trillion. Using innovative asset resolution methods, KAMCO was able to recover at a profit a …