Abstract:
During the post “Tom Yum Kung Crisis”, the bank of Thailand used monetary policy interest rate as a financial instrument. To keep economic growth and stability by raising, maintaining, or lowering the policy interest rate, under a flexible inflation targeting framework to achieve inflation. The determination of monetary policy interest rate is influencing the cost of SMEs operating through the credit channel. Consequently, the purpose of this research is to explore the relationship between the determination of monetary policy interest rate and Non-performing Loans (NPLs) in the SME sector. The OLS regression is used to analyze the cause and effect of macroeconomic variables during 2002 - 2019. The research reveals the economic growth, unemployment rate, the business confident indicator is a significant factor to describe NPL level in the SME sector. However, the determination of monetary policy interest rate is not found to be significant to the NPL level of SMEs in the Thailand context.
