Could tighter prudential regulation have saved Thailand's banks?

The improvement of prudential regulation in the crisis-ridden Asian countri es is suggested by international organizations as a major lesson to be impl emented. The effect from tighter regulation can be estimated by simulating the crisis with new rules. The analysis for Thailand's commercial banks sho ws that more effective prudential regulation could have lowered the impact from credit risks to some degree. More important for the financial meltdown were, however, certain macroeconomic risks. These are not covered by any e xisting regulatory arrangements. Consequently, even many tightly regulated German banks would not survive a macroeconomic shock as happened in Thailan d.