Assessing Thailand’s financial vulnerability: An early warning approach

• Authors: Puah Chin Hong , Kuek Tai Hock , Arip M.Affredy
• Languages of publication: EN

Abstracts

EN

This paper intends to assess financial vulnerability in Thailand through the construction of a financial vulnerability indicator (FVI). This early warning system has been developed using the signals approach proposed by Kaminsky and Reinhart (1999), followed by composite indicator construction. The period under study spans from January 2000 through to December 2016. Our empirical findings indicate that exports has the lowest noise-to-signal ratio (0.13), followed by real GDP (0.15) and house price index (0.20). These suggest that financial crises are usually preceded by a weakening in exports, a slowdown in the economy and a decline in house price. For Thailand, four major financial episodes are successfully outlined during the study period, demonstrating the effectiveness of an early warning system in financial vulnerability forecasting.

Keywords

EN

Financial vulnerability indicator; early warning signals approach

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Prague Development Center, Czech Republic
• Journal: Business and Economic Horizons
• Year: 2017
• Volume: Volume 13
• Issue: Issue 4
• Pages: 496-505

Dates

published

2017-10-12

Contributors

author

Puah Chin Hong

• Faculty of Economics and Business, Universiti Malaysia Sarawak, Malaysia

author

Kuek Tai Hock

• Faculty of Economics and Business, Universiti Malaysia Sarawak, Malaysia

author

Arip M.Affredy

• Faculty of Economics and Business, Universiti Malaysia Sarawak, Malaysia

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