An Empirical and Institutional Examination of Post-Crisis Capital Flows: Thailand Case

21 Pages Posted: 21 Dec 2001

See all articles by Robert Dekle

Robert Dekle

University of Southern California - Department of Economics

Pongsak Hoontrakul

Sasin of Chulalongkorn University

Date Written: June 5, 2001

Abstract

In this paper, we developed and estimated a model of the Thai firm during the crisis. Our results indicate that firms with the highest debt-equity ratios suffered the steepest declines in earnings per share during the crisis from the financial distressed costs. We take this result as strong evidence for the credit channel. Surprisingly, firms with the largest market capitalizations suffered more than the smaller firms owing to their capital structure and financial leverage effect. We also witness asymmetric impact between the industries - exporters, importers and intermediate. We take this as evidence of different scale-effects on different industries, a feature that we do not explicitly model. In other words, the production effect is more pronouncing in import related industries than the export oriented one. Note that firms that import intermediate goods also suffered greatly from the crisis from both credit and production channels. Taken together, our overall results indicate that the crisis damaged the earnings per share of firms more on credit channels than the production channels. There exists a peculiar tradeoff between benefits from currency devaluation to promote exports and severe adverse impact on both credit channel and asymmetric impact on production channel.

Suggested Citation

Dekle, Robert and Hoontrakul, Pongsak, An Empirical and Institutional Examination of Post-Crisis Capital Flows: Thailand Case (June 5, 2001). Available at SSRN: https://ssrn.com/abstract=292921 or http://dx.doi.org/10.2139/ssrn.292921

Robert Dekle

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States
213-740-8335 (Phone)

Pongsak Hoontrakul (Contact Author)

Sasin of Chulalongkorn University ( email )

Sasa Patasala Building, Soi Chulalongkorn 12 (2)
Phyathai Road
Bangkok 10330
Thailand
+662 954 1689 (Phone)
+662 954 1690 (Fax)

HOME PAGE: http://www.pongsak.hoontrakul.com

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