The Asian Financial Crisis : Emerging Economies

1372 Words6 Pages
Cause Prior to the 1997 Asian financial crisis, emerging economies such as Thailand, Indonesia, and South Korea contributed to nearly half of the economies across the world. Emerging economies are markets within countries whose economy is progressing towards become more advanced. Economies in countries such as the United States, Europe, and Japan are considered advanced. Emerging countries progress with increased growth and industrialization. Economic growth also includes collecting some liquidity in local debt and other areas within the financial info structure. Liquidity is assets or securities that can quickly be bought or sold in the market without causing radical change to the asset’s price. Due to the lack of strict accounting standards and security regulations commonly found in advanced markets, emerging markets often do not have the same level of efficiency built into the financial framework as opposed to advanced economies. The markets though usually share common physical infrastructure such as banks, stock exchange, and collective currency. Emerging markets are often sought by investors due to their potential of returns higher than the more stable advanced economies. The markets often experience rapid economic growth as measured by gross domestic product. As in most situations, high returns often accompanied with high risk. The root of the higher risk in emerging economies often correlate with issues such as political instability, voids within the domestic
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