| Summary: | 碩士 === 國防管理學院 === 國防財務資源研究所 === 93 === Many Taiwan financial institutions experienced deterioration in the quality of financial assets and serious overdue loans(ODL),after the 1997 Asian Financial Crisis, due to economic. To intensify the financial system and enhance bank competitive advantages, the government imposed a series of financial innovations, including the establishment of a financial restructuring fund(FRF). The FRF aims to help the bank write off uncollectible loans, raise the capital adequacy ratio, lead troubled financial institutions off the market, and therefore maintain the stability of the financial system.
To gain insight into how the FRF works in practice, we conduct an empirical study, using quarterly data taken from 41 domestic commercial banks over fiscal years from 1998 to 2004. By employing panel data regression models and t tests, this research comes to the following conclusions. First, the imposition of the FRF does help the bank reduce ODL ratios, indicating that the FRF, in fact, is working as intended when it was established. Second, although the commercial banks’ returns of equity have increasingly improved over time after the introduction of the FRF, the effect, however, is not significant, which might result from a counterbalancing effect of the relevant policy. Finally, our study shows that the acquiring banks’ returns of equity experienced a significant change after taking over troubled institutions, which deserves the banker’s and the authority’s attention.
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