Research Studies Project Report (M.B.A.) - Asian Institute of Technology, 1998

A research submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management

With English abstract

The financial crisis in South-Est Asia in 1997, created a turmoil in the banking sector in the region. Many banks went bankrupt, while others were trying to minimize the impacts. "La Banque pour le Commerce Exterieur Lao", might also have been affected by this crisis. As it did not go bankrupt and its 1997 result is not yet available, an analysis has been carried out in an attempt to find out how it could react in order to handle the crisis in its favor. As it is difficult to evaluate the effects of the crisis caused by inflation and interest rate, the analysis emphasizes mainly the effects caused by the exchange rate. The bank could hedge its p01i folio against exchange rate risks by adjusting its foreign accounts on both sides of its balance sheet. Three scenarios have been laid down to study the impact of the exchange rate on the bank' s performance in 1997. The result of the analysis leads to a hypothetical conclusion that the bank may even benefit from this crisis.