| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 95 === Based on Zhong, Jun-Wen & Chen, Hui-Ling (2001) and Chen, Hui-Ling (2002) valuation model, this study discusses whether or not the government should save the problem banks by investigating the correlation between liquidation value and success of self-help of the banks. The results are summarized as follows:
1. The empirical results show that banks having a financial crisis with higher liquidation value show a higher chance of recovering by being merged or other self-help method, while ones with lower liquidation value display a higher possibility of bankruptcy and a lower chance of being merged before taken over or liquidated. So under some conditions, the protection from the government regarding banks with financial struggles is necessary.
2. It must be noted that that banks facing financial struggles with lower liquidation value can not solely rely on the protection policies to escape from the crisis. On the contrary the longer the time, the higher the risk; if the crisis is not solved immediately, it will be out of control. Furthermore, the management of banks facing a financial crisis for a long-term period would be tempted to use a high-risk method to save the bank, therefore sinking it into a bigger crisis. Thus, it is highly recommended that the government should take immediate repercussions to solve these crises as effectively and efficiently as possible.
3. This research aims to find another trigger of PCA. However, as proved by the empirical studies from Taitung business bank（東企）, Chinese bank（中華商銀）, Jih-Sun international bank（日盛） and bank of oversea Chinese（僑銀）, it is very difficult to determine whether or not to take over the bank before the crisis reaches a limit. Thus, the decision of whether or not to interfere and take over a bank facing a crisis not only determines on the net worth or liquidation value, but also on other factors such as management, and staffs.
4. Finally, it is highly recommended that the government should do the due diligence for problem banks in order to investigate their true liquidation value. By then, the government can make best use of the information to determine whether those banks should be taken over or not.
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