Likewise, the stock market index plummeted to less than 5,000 points in early 1996 owing to the heightened cross-Strait tensions at the time, but then slowly recovered. The index rose further to reach 9,890 in August 1997 and, in spite of subsequently falling 30 percent, had already started to recover by the end of the year. This surplus is indicative of the excess saving that still exists in our economy. During our process of economic development, there has been no excessive reliance upon foreign capital. Although our saving rate has steadily declined from a peak of 38.5 percent in 1987 to 24.4 percent in 1997, it is still higher than the corresponding investment rate.
Private saving continues to be the main source of funds for local investment.
As a result, enterprises' capital ratios have also significantly increased, and their dependence on debts has on the whole markedly decreased. In this way, the ability of these companies to respond to changing circumstances increased. In addition, in view of the increasing popularity of direct finance as a means of raising funds, banks directed their attention towards lending to small and medium-sized enterprises and consumer loans. As a result, small and medium-sized enterprises have been able to lessen their dependence upon underground financing, and banks' credit risks have become more widely spread out. During the second half of 1995 and into 1996, there were several instances where community financial institutions experienced panic runs.