ISAS Briefs

Until the mid-1990s, the banking systems in most of Asia remained heavily regulated, and barriers to foreign competition were prohibitively high. However, in the aftermath of the East Asian crisis of 1997-98, financial sector restructuring, including the revamp of the financial regulations, has been an important element in the structural adjustment programmes in Indonesia, Korea, Thailand and the Philippines. Broadly, governments in the crisis-hit regional economies have restructured their financial systems by shutting down commercial banks and finance companies, merging some existing institutions and nationalising others, injecting public funds to recapitalised viable banks, putting in place systematic asset resolution strategies, as well as easing regulatory impediments to foreign bank entry. Other countries in the region such as China and India have also taken steps towards financial deregulation.