1997 Asian financial crisis
The Asian financial crisis was a period of financial crisis. It gripped much of Asia beginning in July 1997.
Causes
Currency pegs and fixed exchange rates: Many Asian countries, including Thailand, South Korea, and Indonesia, had fixed exchange rate regimes or money pegs to the U.S. dollar. This made their currencies vulnerable to speculative attack.[1]
Rapid capital inflows and excessive borrowing: Asian economies experienced a surge in capital inflows and relied heavily on foreign borrowing, leading to over-investment and unsustainable levels of debt [2]
Weak financial systems and corporate governance: short financial regulations, weak banking sectors, and poor corporate governance practices exacerbated the vulnerabilities in the affected economies
Consequences
Money reduction: Many Asian currencies experienced significant devaluations, leading to a sharp decline in the value of assets and increased debt burdens for companies with foreign currency liabilities
Financial sector failures: Banks and financial institutions faced insolvency and encountered difficulties in meeting their duty, contributing to a severe banking crisis in the region [3]
Economic contraction and social impact: The crisis resulted in severe economic contractions, rising unemployment, and social hardships, including increased poverty rates and social unrest in some countries [4]
IMF role
International Monetary Fund (IMF) assistance and conditionality: The IMF provided financial assistance to the affected countries, often in exchange for implementing structural reforms, fiscal austerity measures, and financial sector reforms [5]
References
- Christiano, Lawrence; Gust, Christopher (2000-04). "The Expectations Trap Hypothesis". Working paper (Federal Reserve Bank of Cleveland). doi:10.26509/frbc-wp-200004. ISSN 2573-7953.
{{cite journal}}: Check date values in:|date=(help) - web.mit.edu http://web.mit.edu/krugman/www/DISINTER.html. Retrieved 2023-05-30.
{{cite web}}: Missing or empty|title=(help) - "Finance and Development". Finance and Development | F&D. Retrieved 2023-05-30.
- https://www.facebook.com/Investopedia. "Asian Financial Crisis: Causes, Response, Lessons Learned". Investopedia. Retrieved 2023-05-30.
{{cite web}}:|last=has generic name (help); External link in|last= - "The Asian Crisis: A View from the IMF--Address by Stanley Fischer". IMF. Retrieved 2023-05-30.
Related pages
Papers
- Ngian Kee Jin (March 2000). Coping with the Asian Financial Crisis: The Singapore Experience. Institute of Southeast Asian Studies. ISSN 0219-3582
- Tiwari, Rajnish (2003). Post-crisis Exchange Rate Regimes in Southeast Asia, Seminar Paper, University of Hamburg.
- Kilgour, Andrea (1999). The changing economic situation in Vietnam: A product of the Asian crisis? Archived 17 August 2008 at the Wayback Machine
- Stiglitz, Joseph (1996). Some Lessons From The East Asian Miracle. The World Bank Research Observer.
- Weisbrot, Mark (August 2007). Ten Years After: The Lasting Impact of the Asian Financial Crisis. Center for Economic and Policy Research.
- Tecson, Marcelo L. (2009), "IMF Must Renounce Its Weapon of Mass Destruction: High Interest Rates" (4-part paper on high-interest-rate fallacies and alternatives, emailed to IMF and others on 27 January 2009)
Other websites
- Women bear brunt of crisis, article by Australian photo-journalist John Le Fevre examining the effects of the Asian Economic Crisis on Asia's female workforce
- The Crash (transcript only), from the PBS series Frontline
- Impact on Indonesia from the Dean Peter Krogh Foreign Affairs Digital Archives
- Congressional Research Service report for US Congress
- Asia's Financial Sector: 12 Things to Know Asian Development Bank