Unpopular guardian the politics of central banking in Thailand, 1942--1997

For students of Thai political economy, the financial crisis of 1997 brought the Bank of Thailand (BOT) under the spotlight. The Bank's failure to prevent the crisis damaged its longstanding reputation as the country's staunch defender of financial stability. While many studies rightly point to the decline in the BOT's autonomy, reflected in the political interference with the Bank's financial supervisory role, as a major contributing factor to the crisis, some important questions remain around why the BOT decided to liberalize the financial system in the late 1980s and why it insisted upon pursuing a fixed exchange rate regime?;This thesis explains the path toward financial liberalization and crisis and the constraints on the Bank's policy choices during this period from a historical institutionalist perspective by focusing on the evolution of Thailand's monetary and financial policy and its connection with the BOT's relative autonomy. To begin, the thesis examines the origin of the Bank's commitment to monetary conservatism and international credibility and the formation of its behavioral autonomy from the 1940s to the 1960s to explain the BOT's leading role in monetary and financial management, despite its weak legal status. The institutionalization of the Bank within the context of authoritarianism and the Cold War is key to the making of this relative independence from the government, financial sector, and international financial community. As the BOT emerged as a leading monetary authority by the 1970s, it was able to push for various policy preferences guided by a conservative tradition and the desire to maintain international credibility. At times, the difficulty in balancing between domestic and external obligations and demands arose to complicate the Bank's policy decisions. The move toward financial liberalization and the persistent pursuit of a fixed exchange regime will be explained based on this background together with other contributing domestic and external factors.;Apart from insight into Thailand's experience with financial liberalization and crisis, this thesis offers understanding of the Thai state's autonomy in monetary and financial policy from the interference of societal and external actors. That this autonomy eroded in the 1990s due to democratization and financial liberalization reflected the challenges to state power posed by political reform and global economic integration. Other contributions include the thesis's application of Selznick's institutionalism to the understanding of central bank 'de facto' independence, as well as a theoretical bridging among the three strands of new institutionalism in their understanding of preferences and actions.