Financing Development and the Financial Crisis of Thailand

In order to unearth the causes of the crisis in Thailand, we have examined the phases of Thailand's economic development during the period from 1975 to 1998. We have also discussed and critiqued the predominant explanations of the crisis, explored probable reasons for the massive inflow/outflow of capital, and then have tested a variety of hypotheses: the pro-cyclicality of consumer spending; the crowding-out effect of foreign saving on domestic saving; and the speculative behaviours of investors. To test these hypotheses, we have used data from the Bank of Thailand's homepage and from various issues of the International Financial Statistics, and have applied several econometric techniques such as co-integration, the ordinary least squares, the instrumental variable method and the Granger causality.