Calls for more Competition in Thailand’s Banking Sector

An academic from the Thailand Development Research Institute (TDRI) has criticized the high interest rates for deposits and loans in Thai commercial banks.

Key Takeaways

The interest rates for deposits and loans in Thai commercial banks are excessively high compared to many other countries, hindering competition in the financial market.
While Thai banks offer low deposit rates, their loan rates are among the highest, indicating a lack of competition among commercial banks.
The government should utilize state-owned banks to foster competition by offering higher deposit interest rates and lower loan interest rates.

Academics suggest that the government should use state-owned banks to increase competition in the financial market. The TDRI research fellow pointed out that while the overall economy is growing modestly, bank profits are increasing rapidly.

They also found that Thai banks offer low deposit rates but have high loan rates compared to other countries. This lack of competition among banks limits the options for savers. The government is urged to use state banks to incentivize higher deposit rates and lower loan rates.