Financial Liberalisation in Emerging Markets: How Does Bank Lending Change?

Abstract

Financial liberalisation has often failed in the past due to underestimated problems of structural change. We analyse such changes in lending behaviour of Thai commercial banks during a liberalisation phase by way of unique micro data. Liberalisation has expected positive effects, such as lowering the interest rate spread and collateral requirements. Liberalisation causes structural change, such as a decline in collateral-based and relationship banking. However, the liberal-isation evidence is consistent with more risk taking, such as lending to more risky projects and less protection against default. The Thai experience suggests obvious policy lessons. Copyright 2007 The Authors.

Small and Medium Sized Enterprises Development under Trade Liberalisation: A Survey of Nigerian Experience

“…He went further to state that trade liberalisation alone is not sufficient to boost growth but can only work when accompanied by other policies that ensure safe business and political environment besides a good regulatory legal framework that protects all stakeholders in the economy. In the same vein, Hübler, Menkhoff, and Suwanaporn, (2008) report that the 'average effects' of cross-country regression hide different experiences of countries that have implemented liberalization and they suggested the need for the use of micro level data in the study of the effects of liberalization.…”

Banks’ lending behaviour under repressed financial regulatory environment

“…Prior studies which have analysed the impact of financial liberalisation and repression on banks' lending in both developed and developing countries have used aggregate level data such as changes in banking policies and credit volumes. However, micro level data on banks' lending behaviours would provide a complete picture of how banks respond to changes in macro level policies (Hübler et al, 2008). This will allow policy makers to identify opportunities and risks to draw better targeted policy recommendations.…”

Non-commercial Financial Intermediaries as an Alternative for Commercial Banks in the Post-crisis Economy

“…since the 1970s, in the financial systems of individual countries (especially those with mature market economy) occurred many processes and phenomena influencing shape and functioning of the financial intermediaries. As the most important among them one may consider globalization, deregulation and liberalization, demutualization, privatization, changes in structure and direction of activity conducted by banks or emerging new forms and types of money 1 [De Nicoló et al, 2003;Hübler, Menkhoff, Suwanaporn, 2008;Kose et al, 2006].…”