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Federal Reserve Bank of Chicago
Economic Perspectives
The credit risk-contingency system of an Asian development bank
Robert M. Townsend
Jacob Yaron

This article offers a new method for the evaluation of financial institutions, one that combines socioeconomic survey data with appropriate accounting standards. A government-operated development bank in Thailand is found to be offering a risk-contingency or insurance system while being regulated as a more standard, loan-generating bank. Farmer clients experiencing adverse shocks receive indemnities that improve their well-being. With proper provisioning and accounts, that welfare gain could be weighed against premia or government subsidies.

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Robert M. Townsend & Jacob Yaron, "The credit risk-contingency system of an Asian development bank" , Federal Reserve Bank of Chicago, Economic Perspectives, issue Q III, pages 31-48, 2001.
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Keywords: Financial crises - Asia ; Financial institutions - Thailand ; Thailand
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