A Proposal for the Doctoral Research:

A Comparative Study on Risk Management

Strategies of Commercial Banks in Japan and
Thailand

Background of the study

Risk management has received increasing attention in recent years.

Globalization of trade and production has increased financial and direct
investment volatility of emerging markets. In addition, in both developed
and emerging economies, capital markets have become more important as
a means of allocating resources. As a result, banks and non-financial
firms discover that their exposure to risks have increased significantly.

Commercial banks act as shock absorbers, absorbing errors in risk

management made elsewhere in the system, by accepting and managing
market risk and credit risk. The capacity of the banks to act as buffers
against errors in risk manegement depends on their ability to measure
and mitigate their own exposures, as well as the sufficiency of their
equity capital. A well-managed and well-capitalized banking system is
thus requisite for avoiding systemic economic and financial crises.

In Thailand (herein referred to as “Thai”), financial institutions have

placed increased emphasis on the importance of risk management.
However, there have not been any significant studies in Thai on this field
to manage risk in an appropriate way. Thai commercial banks still using
old and inappropriate techniques in managing their risks. In effect, they
have to face lot of problems to handle the risks when any awkward
situation happens in the financial sector. For instance, the 1997 Southeast
Asian Crisis, one of the cited factors that led to the collapse of the Thai
financial system, is the lending behavior of Thai financial institutions.
Finding of different researchers tends to comment that the lending criteria
and risk management strategies were not used appropriately. As a result,
the financial sector as a whole became fragile and vulnerable. Therefore,
the vacuum in this field leads to conduct the study of risk management
strategies for Thai financial institutions, which will attempt to overcome
the problem in Thai financial system.

Objectives of the study

The objectives of the study are as follows:

1. To determine risk management strategies of commercial banks both
in Japan and Thai.
 2. To determine similarities and differences between Japan
commercial banks and Thai commercial banks.
3. To recommend appropriate models and strategies for the
quantification of market risk and credit risk under Thai financial
market situation.

Methodology of the study

The methodology will be as following:

1. Ten Japanese and Thai commercial banks will be considered as
research sample.
2. A formal questionnaire as well as face-to-face interview of
concerned persons will be conducted to collect the data.
3. To analyze the data, appropriate statistical tools will be used.

Rational of the study

This study will have both practical and academic value. It will improve
the efficiency of Thai financial sector, and thus consequently lead to a
more stable and stronger capital market in the country. Moreover, it will
help Thai financial institutions to take appropriate measures in managing
their risks. This can strengthen the whole financial systems. The study
will also contribute to the existing body of knowledge on risk
management.
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