A theory of financial authority credit cycles and social conflict in Thailand and Taiwan

My thesis challenges the central bank independence literature by demonstrating that the delegation of regulatory authority to an independent government agency can lead to asset price inflation and the outbreak of banking crisis. I argue that the central bank independence hypothesis ignores the monetary and fiscal consequences of financial regulation and is therefore conceptually incomplete. Instead of focusing on institutional optimality, I propose that we explain both monetary stability and instability in terms of social iniquities generated by regulatory actions.;I develop a game theoretic model that explains the outbreak of banking crisis in terms of strategic conflict between central bank regulators and bank managers. My thesis argues that regulatory actions often generate monetary and fiscal consequences that privilege some members of society and discriminate against others, and thus delegating regulatory authority to an independent central bank may not eliminate the conflict between the interests of bank managers, shareholders and taxpayers.;The substantive chapters of my thesis consist of an empirical investigation of regulatory politics in Thailand and Taiwan. My research is based upon extensive interviews that I conducted at 4 Thai commercial banks, 10 Taiwanese commercial banks. As a result, my research not only offers a new explanation for financial system stability and instability, but uses never before published information in order to reconstruct the decision-making environment of bank managers and financial regulators.