ABSTRACT
This chapter examines how the banking sector and the economic crises are closely intertwined from the Asian financial crisis to global financial crisis. In a mild business cycle, efficient financial firms with conservative lending policies can survive temporary losses, but some aggressive banks fail because of excessive risk-taking behaviors. The Thai banking sector must adjust to survive and thrive during the boom and bust influenced by external and internal shocks. A sharp difference in the loan-deposit ratios was apparent when examining the loan-deposit ratio between Thai banks and foreign banks' branches, whose total loans extension is about 10 percent of Thai banks' lending volume. A proxy for bank efficiency from a social perspective is the size of the interest gap. A comparison of the commercial banks' asset quality in 2004 and 2017 reveals that Thai commercial banks have gained strength considerably despite undergoing the global financial crisis and global recession.
