In addition, during 1987-1995, Thailand experienced a great economic
growth of almost 10% per year (ADB, 2011). With low cost labor force, it
attracted foreign direct investment to build plants in order to export products to
other developed countries. Thailand became confident about its economic status,
so the government had excessive official spending and also encouraged local
commercial banks and finance companies to lend money for real estate and others
(Lai, 2000). This led to the sharp increase in the non-performing loans (NPLs) in
banking industry.