Publication: Political connections, ownership structure, and financial institution failure
Issued Date
2012-04-01
Resource Type
ISSN
1042444X
Other identifier(s)
2-s2.0-84857921034
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Mahidol University
Rights Holder(s)
SCOPUS
Bibliographic Citation
Journal of Multinational Financial Management. Vol.22, No.1-2 (2012), 39-53
Suggested Citation
Piruna Polsiri, Pornsit Jiraporn Political connections, ownership structure, and financial institution failure. Journal of Multinational Financial Management. Vol.22, No.1-2 (2012), 39-53. doi:10.1016/j.mulfin.2012.01.001 Retrieved from: https://repository.li.mahidol.ac.th/handle/20.500.14594/14104
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Title
Political connections, ownership structure, and financial institution failure
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Abstract
Thailand was at the origin of the Asian financial crisis of 1997. Our research seeks to understand what economic and political factors contributed to the collapses of Thailand's financial institutions during the crisis. The distinctive feature of our model is that it incorporates variables for ownership structure as well as political connections in addition to the traditional financial variables. Foreign-owned financial institutions were less likely to fail. The probability of failure is also inversely related to the control rights of the largest shareholder. Finally, there is evidence of the too-big-to-fail (TBTF) policy. Our results are important because they demonstrate that traditional models, especially when applied to emerging economies, can be enhanced by incorporating variables related to ownership structure as well as political connections. © 2012 Elsevier B.V.