Show simple item record

Financial Turmoil in the Banking Sector and the Asian Lamfalussy Process: The Case of Four Economies

dc.contributor.authorChen-Min Hsu
dc.contributor.authorChih-Feng Liao
dc.date.accessioned2015-04-10T10:16:57Z
dc.date.available2015-04-10T10:16:57Z
dc.date.issued2010-06-15
dc.identifier.urihttp://hdl.handle.net/11540/3809
dc.description.abstractThe Japanese government’s response to the financial crisis in the 1990s was late, unprepared and insufficient; it failed to recognize the severity of the crisis, which developed slowly; faced no major domestic or external constraints; and lacked an adequate legal framework for bank resolution. Policy measures adopted after the 1997–1998 systemic crisis, supported by a newly established comprehensive framework for bank resolution, were more decisive. Banking sector problems were eventually resolved by a series of policies implemented from that period, together with an export-led economic recovery. Japan’s experience suggests that it is vital for a government not only to recapitalize the banking system but also to provide banks with adequate incentives to dispose of troubled assets from their balance sheets, even if that required the government to mobilize regulatory measures to do so, as was done in Japan in 2002. Economic stagnation can cause new nonperforming loans to emerge rapidly, and deplete bank capital. If the authorities do not address the banking sector problem promptly, then the crisis will prolong and economic recovery will be substantially delayed.This paper investigates the prevailing financial regulatory structures and impact of the current financial turmoil on banking performance in four Asian economies: the People's Republic of China (PRC); Hong Kong, China; Singapore; and Taipei,China. Both the PRC and Hong Kong, China operate under a fragmented financial regulatory structure, while Singapore and Taipei,China have integrated structures. We examine the role of an integrated financial regulatory structure in helping financial institutions mitigate the impact of the financial crisis, using financial indicators of banks’ capital structure and operating performance in these four economies between 2003 and 2008. Our analysis of the indicators reveals that banking performance under a fragmented financial regulatory structure is not worse than under integrated regulation. This implies that financial regulatory structure is not the main reason why Asian financial institutions suffered only limited losses from the current global financial crisis. However, given the growing complexity of the global financial system, and the relative weakness of current financial regulatory structures in Asia, this paper suggests that East Asian governments should refer to the Lamfalussy Process in the European Union and set up an Asia Financial Stability Dialogue to facilitate policy coordination for regional financial sector stability and development.
dc.languageEnglish
dc.publisherAsian Development Bank
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.titleFinancial Turmoil in the Banking Sector and the Asian Lamfalussy Process: The Case of Four Economies
dc.typeWorking Papers
dc.subject.expertEconomic Development
dc.subject.expertEconomic Infrastructure
dc.subject.expertEconomic Policies
dc.subject.expertRegional Economic Development
dc.subject.expertMicrofinance Programs
dc.subject.expertPublic Finance
dc.subject.expertLocal Financing
dc.subject.expertFinancial Stability
dc.subject.expertFinancial Sector Regulation
dc.subject.adbEnterprises
dc.subject.adbFinancial aid
dc.subject.adbEconomies in transition
dc.subject.adbLocal Finance
dc.subject.adbLocal Government
dc.subject.adbInsurance Companies
dc.subject.adbBanks
dc.subject.adbSocial Equity
dc.subject.naturalSocial responsibility of business
dc.subject.naturalAccounting
dc.subject.naturalPersonal budgets
dc.subject.naturalCost and standard of living
dc.subject.naturalBank accounts
dc.subject.naturalCredit control
dc.subject.naturalRegulatory reform
dc.subject.naturalBanks and banking
dc.title.seriesADBI Working Paper Series
dc.title.volume221
dc.contributor.imprintAsian Development Bank
oar.themeEconomics
oar.themeFinance
oar.adminregionAsia and the Pacific Region
oar.countryBangladesh
oar.countryBhutan
oar.countryIndia
oar.countryMaldives
oar.countryNepal
oar.countrySri Lanka
oar.countryBrunei Darussalam
oar.countryCambodia
oar.countryIndonesia
oar.countryLao People's Democratic
oar.countryMalaysia
oar.countryMyanmar
oar.countryPhilippines
oar.countrySingapore
oar.countryThailand
oar.countryViet Nam
oar.countryCook Islands
oar.countryFiji Islands
oar.countryKiribati
oar.countryMarshall Islands
oar.countryFederated States of Micronesia
oar.countryNauru
oar.countryPalau
oar.countryPapua New Guinea
oar.countrySamoa
oar.countrySolomon Islands
oar.countryTimor-Leste
oar.countryTonga
oar.countryTuvalu
oar.countryVanuatu
oar.countryAfghanistan
oar.countryArmenia
oar.countryAzerbaijan
oar.countryGeorgia
oar.countryKazakhstan
oar.countryKyrgyz Republic
oar.countryPakistan
oar.countryTajikistan
oar.countryTurkmenistan
oar.countryUzbekistan
oar.countryPeople's Republic of China
oar.countryHong Kong
oar.countryChina
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.identifierOAR-004168
oar.authorHsu, Chen-Min
oar.authorLiao, Chih-Feng
oar.importtrue
oar.googlescholar.linkpresenttrue


Files in this item

Thumbnail

This item appears in the following Collection(s)

  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

Show simple item record

Users also downloaded