REGULATIONS FOR CAPITAL MARKETS & ALLOCATION:
HPAEs influenced credit allocation in 3 ways:
enforce regulations to improve private banks’ projection
create financial institutions , Long term credit through banks for development
direct credit to specific sectors & firms - public & private banks
Govt. relationships with banks in HPAEs vary:
a) Hong Kong banks: primarily to ensure their solvency
b) Indonesia, Malaysia, Singapore, Thailand: Banks are privately owned & exercise independent authority over lending. While Govt. broadly guides credit allocation & moral suasion, project selection is left to bankers.