The Quality of Financial Infrastructure and Financial Resilience: Contrasting Taiwan and Thailand

The experiences of Taiwan and Thailand following the 1997 crisis of the baht provide evidence of the importance of the quality of the financial infrastructure of a country in its ability to deal with unstable financial markets. The very high quality of the financial infrastructure in Taiwan (together with its peripheral role in the crisis itself) enabled its economy to escape relatively unscathed. In contrast, a lack of sophisticated financial institutions and nonfinancial firms both triggered the crisis in Thailand and required the Thai economy to experience its full force.