Thailand is a strong emerging market in the past two decades. It had been enjoyed a rapid growth of GDP with annually 9.4% during 1985 to 1996. Though there was a huge recession of the economy during Asian Financial Crisis, Thailand soon recovered after 1999 with a growth rate above 4% annually.
The GDP growth of Thailand is mainly driven by exports due to relatively weak Baht and internal domestic spending designed by Former Prime Minister Thaksin Shinawatra. The banking sector also plays a significant role of capital management and regulation in the economic growth. The overall picture of the banking sector is going to be shown in this paper.
The modern banking history of Thailand started with the Hong Kong & Shanghai Banking Corporation appointing agents in Bangkok in 1865. Followed in 1888, HSBC opened its first branch in Thailand. It is also the first branch opened by a bank in Thailand. Later other foreign and local banks gradually entered the market.
After World War II, due to the dominance of foreign banks in the market, the government took a protective policy to help local banks. In the 1960’s many innovative development plans contributed to the growth of the banking sector. Thailand's modern banking system is made up of a variety of financial institutions including central banks, commercial banks, finance companies, credit foncier companies and stated-owned specialized banks.
3. Overview of the financial institutions in Thailand
The whole banking system is made of five categories of financial institutions. They are central bank, commercial banks, finance companies and credit foncier companies and state-owned Specialized Financial Institutions (SFIs).
3.1 Central Bank
The Bank of Thailand (BOT) is the central bank of Thailand and it was established as the Thai National Banking Bureau. The Bank of Thailand Act was promulgated on 28 April 1942 entitling the Bank of Thailand the...