Financial Institutions in Taiwan: An Analysis of the Regulatory Scheme

Abstract

In 1985, the disclosure of irregularities involving the Tenth Credit Cooperative and the Cathay Investment Trust Company, two leading players in Taiwan's financial sector, led to panic in the financial community. Their concomitant loss of investor confidence resulted in devastating large-scale withdrawals of funds from these two institutions as well as from a host of other financial institutions. Some equilibrium was restored only after the government appointed several government-controlled banks to assume the management of the two perpetrators of financial misconduct.