1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND

..2505-2539
Bank of Thailand Financial Policies and Financial Development
in Thailand 1962-1996
1

Poramet Rangsipol

(.)
..2505-2539

.
. 2500

2510
. 2530

: , , , ,

Abstract
This article aims to study the effect of Bank of Thailand (BOT) financial policy on financial
development in Thailand during 1962-1996. The main findings show that the ceiling on lending rate and
granting economic rent were policies which adversely affect financial development in Thailand during this
time period. The cause which made ceiling on lending rate negatively affect financial development was
due to the BOT ineffectiveness in enforcing this policy. And the cause which made rent exhibit negative
effect on financial development was originated from the early 1960s period. In particular, the BOT gave
1

; Email: poramet.pb@gmail.com

1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND
rent to Thai commercial bank but did not impose any measures which coerced or induced them to use
rent in the way which enhanced the financial sector as a whole. As a result, rent exhibited the negative
effect with very high degree. However, changes in political and economic conditions that have occurred
since early 1970 onwards and financial liberalization policy of the BOT since the early 1990 onwards
could change the incentives of banks to use their rent in the way that had lower adverse effect on
financial development over time. These findings were confirmed by both econometric results and
historical information.
Key Word: Financial Development, Bank of Thailand, Thai Commercial Banks, Ceiling on Lending Rate and
Economic Rent

..2505 . ..2539
(Pakorn, 1994) .
(Pakorn, 1994)
, ( , 2529)
. (Apichat, 2002)

.
3 . Financial Intervention
(Courakis, 1984, Demetriades and
Luintel, 1996; Demetriades and Luintel, 2001 ) Financial Restraint
(Hellman et al., 1997; Hellmann et al., 1998)
Financial Repression
(Shaw, 1973) .

.
Financial Intervention, Financial Restraint Financial Repression
. ..2505-2539
,

[250]

1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND

1. Financial Intervention Courakis (1984)

Demetriades and Luintel (1996) Demetriades and Luintel (2001))



2. Financial Restraint Hellman et al. (1997) Hellmann et al.
(1998)

3. Financial Repression Shaw (1973)

2
( 1)
Financial Repression
1

Financial Intervention
Financial Restraint

Financial Repression
Financial Repression

.
Aretis, et al. (2002) Financial
Intervention Financial Restraint (1) (2)
FDt = 0 + 1LRGDPt + 2RINTRt + i ( Financial Intervention) t ; i= 3,4,,n
FDt = 0 + 1LRGDPt + 2RINTRt + i ( Financial Restraint) t t ; i= 3,4,,n

[251]

(1)
(2)

1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND
2 FD
LRGDP RINTR CLEND, CDEP, CINTE, DCA, LL DCALL2
Financial Intervention RENT RENT2 Financial
Restraint POLTY 3 35
..2505 ..2539
2

FD

LRGDP
RINTR
CLEND ()
CDEPO ()
CINTE ()
DCA
()
LL
()
DCALL (DCA+LL) ()
RENT

RENT2
POLTY

.
. IFS
.
.
.
.
.
.
.

Polity IV Project

Unit root Cointegration

Dynamic Ordinary Least Square
(DOLS)

3 Financial Intervention

(Coefficient of Determination: R2)
(Normal distribution)
2

Financial Intervention CLEND

CLEND (robustness) CLEND

3
RENT RENT2

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1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND
(No autocorrelation)
(Homoscedasticity)
(No misspecification) (No multicollinearity)
R2 0.90
A, B F
A B F
CLEND CDEPO 0.85
C,D,E G

LRGDP RINTR CLEND

. Financial repression
.

3 Financial Intervention4

C
LRGDP RINTR
CLEND
CDEPO
DCA
-1.22
0.17*
0.65***
-0.06
A
(0.75)
(0.07)
(0.12)
(0.03)
-3.48*** 0.39***
-0.15
0.06*
-0.05**
B
(0.47)
(0.05)
(0.17)
(0.03)
(0.02)
-3.98*** 0.46***
0.095
-0.05***
-0.12**
C
(0.27)
(0.03)
(0.10)
(0.01)
(0.02)
-4.04*** 0.46*** 0.30*** -0.04***
D
(0.28)
(0.03)
(0.11)
(0.01)
-4.08*** 0.46*** 0.18*** -0.05***
E
(0.29)
(0.03)
(0.02)
(0.01)
-3.58*** 0.40*** 0.05*** 0.03*** -0.04***
F
(0.31)
(0.03)
(0.11)
(0.01)
(0.01)
-3.66*** 0.41*** 0.33**
G
(0.23)
(0.03)
(0.14)
*, **, *** 10, 5 1
4

LL
-

DCALL
-

-0.10***
(0.02)
-

-0.04***
(0.01)
-0.02***
(0.01)
-

DOLS

[253]

1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND
4 Financial Restraint
Financial Intervention
R2 0.90
K

K LRGDP RINTR
L RENT
RENT2
M,N,O P RENT
RENT2 (Non-linear effect)

4 Financial Restraint

C LRGDP
RINTR
RENT
RENT2
POLTY
- 0.07***
0.76*** -13.22***
K
(0.01)
(0.27)
(1.16)
- 0.09***
0.60*** -30.48*** 362.14***
L
(0.01)
(0.17)
(2.58)
(51.98)
- 0.08***
0.35** -25.47*** 315.59*** 0.01***
M
(0.01)
(0.14)
(2.26)
(41.38)
(0.01)
- 0.076*** 0.53*** -23.21*** 263.76***
N
(0.01)
(0.14)
(2.58)
(46.08)
- 0.07***
0.20
-16.77*** 182.17***
O
(0.01)
(0.15)
(4.80)
(59.37)
- 0.07***
0.46** -21.51*** 242.98***
P
(0.01)
(0.20)
(3.89)
(58.86)
*, **, *** 10, 5 1

CLEND
-

CDEPO
-

182.17***
(59.37)
-

-0.02*
(0.01)

-0.037***
(0.01)
-0.01
(0.02)

RENT RENT2 L,M,N,O P

1 . (FD)
. Financial Repression

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1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND

1 ..2505-2539

Khan (2000)



3 1 (..2505-2514) , 2
(..2515-2532) 3 (..2533-2536)
1
1 .

.

2

..2514 14 ..2516



3 ..2533 .

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1st National and International Conference on Humanities and Social Sciences

October 31, 2014, KU Home, Bangkok, THAILAND

. ..2505
..2539 Financial Repression
.
.

.

2510
. 2530

. 2529. ..2475-2516. :
.
Aretis, P., Demetriades, P., Bassam, F. & Mouratidis, K. 2002. The impact of financial liberalization policies
on financial development: evidence from developing economies. International journal of
finance and economics 7: 109-121.
Courakis, A. 1984. Constraints on bank choices and financial repression in less develop countries.
Oxford Bulletin of Economics and Statistics 46 (4): 341-370.
Demetriades, P. & Luintel, B. 1996. Financial Development, Economic Growth and Banking Sector
Controls: Evidence from India. The Economic Journal 106 (435): 359-374.
Demetriades, P. & Luintel, K. 2001. Financial Restraints in the South Korean Miracle. Journal of
Development Economics 54 (2): 459-479.
Hellman, T., Murdock, K. & Stiglitz. 1997. Financial Restaint: Towards a New Paradigm. In M. Aoki & H.-K.
F. Kim, The Role of Government in East Asian Economic Development. Oxford: Clarendon
Press.
Hellmann, T., Murdock, K. & Sitlitz, J. 1998. Financial Restraint and Market Enhancing View.
Khan, M. 2000. Rent-Seeking as Process. In M. Khan & K. Jomo, Rents, Rent-Seeking and Economic
Development. Cambridge: Cambridge University Press.
Pakorn, V. 1994. Thailand's Financial System: Structure and Liberalization. Bangkok: Thailand
Development Reseach Institute.
Shaw, E. 1973. Financial Deepening in Economic Development. New York: Oxford University Press.

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