Essays on Thailand's financial crisis and economic inequality

This dissertation is comprised of three chapters. The first chapter explores the links between inequality and economic growth as well as those between inequality and such key social variables as political conflict, education, health, and crime. The analysis follows a two-steps process. First, a review of the empirical evidence relating inequality to growth and to each of the various social variables is undertaken. Second, various causal mechanisms that have been proposed in the social science literature to explain those links are surveyed.; The second chapter presents an anatomy of the 1997 Thailand's financial crisis. The chapter analyses the weaknesses in both macro- and micro-economic fundamentals that made the country vulnerable to the crisis. This chapter also explains the rationale of speculators who attacked the Thai Baht in 1997, following earlier (and self-fulfilling) expectation of the devaluation of the currency. The chapter also discusses the standard theoretical speculative attacks models (both the so-called first- and second-generation models) and argues that neither set of models can adequately explain Thailand's financial crisis in 1997.; The final chapter examines the interaction between the government, banks and firms in Thailand to further analyse the 1997 financial crisis. Using pre-crisis data, empirical results show that firms which were either owned by Thai big business groups or which had relationships with banks through their boards' directors were better able to access long-term financing than firms without these characteristics. The results also show that a broad range of standard firm characteristics suggested as important factors by finance literature, played almost no role in explaining the allocation of long-term bank credit in Thailand. This lending pattern contributed to the vulnerability of Thailand's financial system to external shocks.