วารสารวิชาการนิติศาสตร์ มหาวิทยาลัยทักษิณ

Amidst this seemingly happy picture there were some economically unsound conditions underlying practices in the financial sector. This included a rapid increase in the number of financial institutions, the influx of foreign credit into the economy, a heavy reliance on informal networks to conduct business, poor attention to credit analysis, and the existence of money politics. The main causes of the financial crisis included; 1) Weaknesses in domestic macro-economic fundamentals leading to a current account deficit. Thailand had a persistent current account deficit ranging from -5.08 to -8.10 % of GDP. The main reasons behind the current account deficit are the appreciation of the Thai baht in real terms, poor exchange rate management, and demand driven economic growth as the population experienced a large increase in real wages as inflation remained low. The Thai government’s exchange rate regime before the crisis involved pegging the Thai Baht to the U.S. dollar. The Baht had fluctuated very rency loans, which Thai companies and financial institutions exploited for short- term relief. By not allowing the Baht to undertake natural adjustments caused by the influx of foreign currency, its value was maintained at an artificially high level. 2) Speculation in the real estate market Many of the foreign loans were channeled towards the property market in Thailand. Speculators bought large amounts of property and launched projects hoping and expecting the price of property to rise in the near future. For a short while, the inflation in the real estate market caused by increased demand for property by speculators themselves, led speculators to mistakenly believe that a boom was on the way. When it became clear that no boom was coming, speculators began to sell their stakes and the price of real estate collapsed. The loans behind the collapsing projects however still needed to be financed, however now there was no future revenue stream to pay back those loans. The creditors of many loans granted to real estate speculators were finance companies. วารสารวิชาการนิติศาสตร์ มหาวิทยาลัยทักษิณ ปีที่ 4 ฉบับที่ 6 มกราคม - ธันวาคม 2556 