THE ROLE OF FINANCIAL STABILITY IN SUPPORTING SUSTAINABLE ECONOMIC DEVELOPMENT: POLICY SOLUTIONS AND STRATEGIC DIRECTIONS FOR STRENGTHENING THAILAND’S FINANCIAL SYSTEM

Prasit Kaewpitoon

doi:10.36690/2674-5216-2025-2-37-46

Authors

Prasit Kaewpitoon Mae Fah Luang University

DOI:

https://doi.org/10.36690/2674-5216-2025-2-37-46

Keywords:

financial stability, central bank, policy solutions, sustainable economic development, macroprudential policy, banking sector resilience, systemic risk, regulatory framework, household debt, monetary policy, financial governance, Thailand’s financial system

Abstract

Financial stability is not only essential for achieving the primary objective of central banks - price stability - but also plays a fundamental role in fostering sustainable economic growth. In the case of Thailand, maintaining financial stability helps create a favorable environment for both investors and depositors, thereby strengthening confidence in the financial system. A stable financial system enhances the efficiency of financial intermediation, improves the functioning of capital markets, and ensures more effective allocation of resources. These factors collectively contribute to the development of a sound, transparent, and resilient financial infrastructure. Moreover, a stable financial environment reduces the likelihood of financial shocks and systemic risks, which can otherwise have severe consequences for the broader economy. This paper aims to examine the critical role of financial stability in supporting Thailand’s long-term economic development and identify key policy measures to enhance the resilience of its financial system. This study adopts a mixed-methods approach that integrates qualitative policy analysis with quantitative evaluation of financial indicators to comprehensively assess Thailand’s financial stability. The research design centers on a descriptive and analytical framework that enables the identification of macro-financial vulnerabilities, the effectiveness of regulatory responses, and the strategic directions necessary to ensure long-term economic sustainability. This paper explores the importance of financial stability in Thailand, identifies potential vulnerabilities, and discusses comprehensive policy solutions. These include enhancing regulatory frameworks, improving the supervisory capacity of the central bank, and promoting transparency and good governance in financial institutions. By examining Thailand’s current financial landscape and drawing comparisons with international experiences, the study provides strategic recommendations for strengthening the country’s financial stability in the long term.

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