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The relaxation of foreign ownership limits and market integration: the case of Thailand

Daniel F.S. Choi (Waikato Management School, University of Waikato, Private Bag 3105, Hamilton, New Zealand)
Woramon Clovutivat (Bank of Thailand, 273 Samsen Road, Bangkunprom, Bangkok 10200, Thailand)

Managerial Finance

ISSN: 0307-4358

Article publication date: 1 July 2004

Abstract

The Thai stock market maintains two separate listings for common stocks which have reached foreign ownership limits. Prices on the Foreign Board are typically traded at a premium relative to prices on the Main Board. The price premium is both a measure and evidence of market segmentation. Thai commercial banks were faced with financial and operational difficulties in the wake of the 1997 financial crisis. To rescue the banking industry, the Thai government relaxed the foreign ownership limit for a ten‐year period. We show in this paper that the Thai banking industry was segmented before the crisis; but when the foreign ownership limits were removed, the banking industry was integrated.

Keywords

Citation

Choi, D.F.S. and Clovutivat, W. (2004), "The relaxation of foreign ownership limits and market integration: the case of Thailand", Managerial Finance, Vol. 30 No. 7, pp. 78-89. https://doi.org/10.1108/03074350410769182

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited