Finance, Growth and Stability: Financing Economic Development in Thailand, 1960-1986

This book is about the role of finance in the process of development in general and in the economic development of Thailand in particular. Its main contribution is to show that the role of finance cannot be adequately studied at the level of macroeconomic aggregates (savings, investment and so on); the main causes and effects of financial development can only be studied at the sectoral level. The study concentrates on financial behaviour in the private sector; splitting it up into the household sector of self-employed firms and the corporate sector. The author shows that in Thailand these two segmens of the private sector, with their different production conditions, have fundamentally different saving behaviour, investment behaviour and ways of interaction with the financial system. Flow-of-funds accounts are used to show that the main dimension of the financial development is that the saving surplus of the household sector is transferred to the corporate sector. It is also shown that the short-term stability pattern of the economy and the effectiveness of stabilization policies can only be adequately analysed if the different saving-investment behaviours of the two main segments of the private sector are also taken into account.