On the rationale of bank lending in pre-crisis Thailand

Lukas Menkhoff (1) , Chodechai Suwanaporn (2)

1 Department of Economics
2 Department of Economics

Evidence from credit files is provided to examine bank lending determinants of Thai commercial banks. Their lending practice follows reasonable patterns as a standard set of variables, including indirect risk variables, explains much of the variance in interest rate spread. Reflecting institutional differences with mature markets, we find higher im-portance of relationship banking and risk control via credit availability. Information about later default reveals prudent relationship lending. However, banks could have made bet-ter use of available information about borrowers' riskiness. These findings do not sup-port a general verdict of bad banking but indicate room to improve lending decisions.

Mots clés: Social Sciences & Humanities

Lukas Menkhoff, Chodechai Suwanaporn. On the rationale of bank lending in pre-crisis Thailand. Applied Economics, 2007, 39 (09), pp.1077-1089. ⟨10.1080/00036840500447815⟩. ⟨hal-00581952⟩