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Governing Finance

East Asia's Adoption of International Standards

Andrew Walter

Publication Year: 2008

The international financial community blamed the Asian crisis of 1997-1998 on deep failures of domestic financial governance. To avoid similar crises in the future, this community adopted and promoted a set of international "best practice" standards of financial governance. The G7 asked specialized public and private sector bodies to set international standards, and tasked the International Monetary Fund and the World Bank with their global dissemination. Non-Western countries were thereby encouraged to emulate Western practices in banking and securities supervision, corporate governance, financial disclosure, and policy transparency.

In Governing Finance, Andrew Walter explains why Indonesia, Malaysia, South Korea, and Thailand-key targets and test cases of this international standards project-were placed under intense pressure to transform their domestic financial governance. Walter finds that the depth of the economic crisis, and more enduring aspects of Asian capitalism, such as family ownership of firms, made substantive compliance with international standards very costly for the private sector and politically difficult for governments to achieve. In spite of international compliance pressure, the result was varying degrees of cosmetic or "mock" compliance. In a book containing lessons for any agency or country attempting to implement lasting change in financial governance, Walter emphasizes the limits of global regulatory convergence in the absence of support from domestic politicians, institutions, and firms.

Published by: Cornell University Press

Cover

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pp. 1-2

Title Page, Copyright

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pp. iii-iv

Contents

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p. v-v

Figures

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p. vii-vii

Tables

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pp. ix-x

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Acknowledgments

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pp. xi-xii

Thanks are due to various individuals and institutions who assisted in the research and preparation of this study: the staff at the Institute of Defence and Strategic Studies at NTU in Singapore where I spent a very enjoyable year as a visiting fellow, and Barry Desker and Yuen Foong Khong for encouraging me to apply for a fellowship there and for supporting my ...

Abbreviations

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pp. xiii-xv

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Introduction: International Standards and Financial Governance

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pp. 1-7

The financial contagion that spread from Thailand in mid-1997 to the rest of Asia and then on to Brazil, Russia, and finally to the developed world’s financial centers was a major shock to the global economy. It was also a shock to global political elites and a watershed in the long-running debate about the need for reform of the global financial architecture. Faced with a ...

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1. The Asian Crisis and the International Financial Standards Project

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pp. 8-28

This chapter explains the impact of the Asian crisis of 1997–98 on the international financial standards regime that emerged promptly on its heels. Although some international standards existed before 1997, the crisis played a key role in focusing international attention on financial supervision failures in major developing countries and in promoting the idea that ...

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2. A Theory of Compliance with International Standards

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pp. 29-49

The previous chapter argued that the rise of regulatory neoliberalism and the associated international standards project raises important practical challenges for many countries, especially developing ones. This chapter has two primary objectives. First, it asks how we should understand compliance in the world economy and how this relates to the concept of convergence ...

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3. Banking Supervision in Indonesia

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pp. 50-77

After a deep economic and political crisis over 1997–98, the Government of Indonesia (GOI) portrayed the goal of compliance with international banking supervision standards as a core plank of its reform strategy for the banking sector and the financial regulatory framework. More broadly, given Indonesia’s still bank-dominated financial system, banking supervision has ...

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4. Corporate Governance in Thailand

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pp. 78-98

This chapter evaluates Thailand’s compliance with international corporate governance standards since 1997. At the outset of the crisis, there was no single set of recognized international standards in corporate governance. The G7-designated standard setter in this area, the OECD, set up a task force only in April 1998 and issued the Principles of Corporate Governance ...

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5. Banking Supervision and Corporate Governance in Malaysia

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pp. 99-125

Malaysia is a rather different case to Indonesia and Thailand. Of the four countries most affected by the crisis, only Malaysia managed to avoid IMF intervention and conditionality. Even so, Malaysia’s government joined its neighbors in committing itself to convergence upon international best-practice standards in spite of its reputation for macroeconomic unorthodox ...

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6. Banking Supervision, Corporate Governance, and Financial Disclosure in Korea

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pp. 126-165

In this chapter, I complete the assessment of compliance with international standards in the largest of the four main crisis-hit Asian economies, South Korea. I extend the scope of assessment even wider than in the previous chapter to include standards in banking supervision, corporate governance and accounting ...

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7. Practical and Theoretical Implications

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pp. 166-183

This study began by asking three main questions. These are: To what extent do Asian countries comply with international regulatory standards? What explains compliance and noncompliance? And to what extent is mock compliance a sustainable strategy for developing countries and private sec-tor actors? In this chapter, I provide answers to these questions by drawing ...

Appendix: Key InternationalStandards and Codes

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pp. 185-187

Notes

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pp. 189-210

References

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pp. 211-226

Index

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pp. 227-235


E-ISBN-13: 9780801459399
Print-ISBN-13: 9780801446450

Page Count: 256
Publication Year: 2008

Edition: 1
Series Title: Cornell Studies in Money