The Cause of the Asian Financial Crisis

On the other hand, in Asia, currencies in most of the countries had become so overvalued. Therefore, they had to devalue followed by floating exchange rates. On the other hand, it is evident that the regions had experienced some level of economic growth before the crises. For Mexico, this was engaging in Free trade (as a member of NAFTA) as well as the discovery of oil reserves, both of which promised a great future for the country. On the other hand, Asia had gained a reputation as the growth center of the world, which showed that the country had been experiencing some level of growth. For Mexico and Asia, political issues (Mexico in 1994) also contributed to the crises. However, this was not particularly the case with the debt crisis of 1982. Political tensions within each country resulted in investment problems, which aggravated economic problems that they were already facing. With regards to recovery, both Asia and Mexico received bail-out packages that would help the countries towards recovery. Here, international help was needed given that the countries faced significant economic problems that would have worsened without

In 1997 the country’s exports were no longer booming and the Thai economy entered a unsafe and unpredictable phase. Foreign investors were skeptical about the current-account deficit and the big loans property developers. Bad debt continued to mount up and the stock market crashed to depths not seen in eight years. This caused the baht to fall prey to speculative attack. High debt, heavy borrowing, large current account deficit, and the semi-fixed exchange rate system all played a part to the Thai crisis.

According to the specialists, there are many reasons for this global financial crisis. We try to focus some prime reasons behind this

The Global Financial Crisis, also known as The Great Recession, broke out in the United States of America in the middle of 2007 and continued on until 2008. There were many factors that contributed to the cause of The Global Financial Crisis and many effects that emerged, because the impact it had on the financial system. The Global Financial Crisis started because of house market crash in 2007. There were many factors that contributed to the housing market crash in 2007. These factors included: subprime mortgages, the housing bubble, and government policies and regulations. The factors were a result of poor financial investments and high risk gambling, which slumped down interest rates and price of many assets. Government policies and regulations were made in order to attempt to solve the crises that emerged; instead these government policies backfired and escalated the problem even further.

Governments had to come up with some solutions in order to further avert the decline of their country 's economy as the financial crises of the United States overflowed into the global financial and world economy. (Marshall, n.d).This paper discusses the history of the financial crisis - its causes, impacts, and the responses of governments and other institutions.

The Asian Financial Crisis, that began in the middle of 1997, was a surprise to many. It all started when Thailand had a financial crisis which ended up spreading to its neighboring Southeast Asian countries. This mass spread was largely due to the intense devaluation of currencies in Asia . The crisis caused mass capital outflows and investor flight because investors lost confidence in the financial systems in many of those countries. Although it started out being contained in Thailand, it spread to other East Asian countries and ended up impacting Malaysia, Indonesia, the Philippines, South Korea, Hong Kong, and China. Consequently, the lack of investor confidence caused the international stock markets suffered from this crisis, which also impacted other countries that reside outside of the Asian continent.

The Asian Financial Crisis, that began in the middle of 1997, was a surprise to many. It all started when Thailand had a financial crisis which ended up spreading to its neighboring Southeast Asian countries. This mass spread was largely due to the intense devaluation of currencies in Asia . The crisis caused mass capital outflows and investor flight because investors lost confidence in the financial systems in many of thOSE countries. Although it started out being contained in Thailand, it spread to other east Asian countries and ended up impacting Malaysia, Indonesia, the Philippines, South Korea, Hong Kong, and China. Consequently, the lack of investor confidence caused the international stock markets suffered from this crisis which also impacted other countries that reside outside of the Asian continent.

In 1997, there occurred certain shifts in expectations from the market. The regional contagion and confidence led to the East Asian financial turmoil. In 1990s, it had been reported that the microeconomic and macroeconomic businesses were not performing as expected. The local and international investors had not held enough grips into the looming financial challenges to be expected by the financial fragments. These investors panicked and participated in fraudulent and faulty approaches and policies of operation in the market through the influence of the International Monetary Fund together with the global financial body. The financial policies, which were laid by the small businesses within the region, had failed to bring enough financial performance in the local and international market. For instance, reports claim that these businesses were not large enough to hold immense support to the structure of the economy in the region. With time, the stability of the financial structure was brought to question. This was later contributed by the influences obtained from the international financial bodies and the International Monetary Fund committee (Corsetti, Pesenti, & Roubini, 1999, p.305-6).

Analysis of “The Global Financial Crisis: Causes, Effects, Policies and Prospects” Dominick Salvatore, Journal of Politics & Society, Columbia University

Asian countries economies suffered a slow economic growth during 2008 and 2009 mainly because being export economies, and the United States netting almost 1/3 of world’s consumption. East Asia was the most affected part of Asia, specifically Singapore and Japan. Singapore GDP’s dropped from a 14% annual growth rate in 2008 to a 1.1% in 2009 and Japan annual growth rate declined an astonishing 15.2% during the first quarter of 2009. As in the USA, Asia economy have had a strong recovering road but has been positively affected by the USA uprising economy. (Adbi.org)

Since the Great Depression, the world has not witnessed an economic crisis on the scale of the current crisis. This is to the extent of it being referred to as the Great Depression of the 21st century. The crisis has resulted in a number of questions, most of which revolve around the interaction of political and economic forces in global economic management. It is difficult to point at one specific factor as a cause for the economic crisis, on the basis of arguments presented by a substantial number of commentators. What is meant here is that the economic crisis that has engulfed the world is a result of a wide range of gaps in political and economic governance. It is imperative to observe that the globalized economy of contemporary times encourages economic interdependence. However, it is the economic interdependence that has resulted in the replication of economic problems from one country or region to other countries and regions. This essay discusses the causes of the current global economic crises and the poor governance of the global monetary system.

Commonly referred to as the “Asian Contagion” the East Asian financial crisis of 1997 marked a time in which multiple Asian countries fell into a recession as a result of financialization. Although the East Asian financial crisis affected over ten countries, Thailand’s economy is will first be primarily analyzed prior to the crash because it was the first economy to fall and essentially started the crisis. In retrospect, the complexity of the financial crisis has caused much debate on what actually started the crisis in the first place. In order to address the various positions of the East Asian financial crisis, the works of Charles Kindleberger, Krippner, and Dani Rodrik are analyzed and compared. While the crisis has many components that ultimately suggest that conjoined multiple factors are potentially to blame, these authors suggest that specific instances are the main culprit. In essence, Kindleberger states that investor and lender speculation deemed the crisis inevitable, Krippner condemns government policies, while Rodrik suggests that hyper-globalization is to blame.

Another example of a financial crisis that occurred in the BRC economies was the 1997 Asian Financial Crisis. This financial crisis differed greatly from the Latin American Crisis, as this financial crisis entailed a speculative attack on a currency . Defined, a speculative attack on a currency is a devaluing of the exchange rate brought upon by a large sell off of a country’s currency. In the late 1980s and early 1990s, Thailand and other Asian countries had experienced growth due strong trade flows, which lead to an increase in most asset classes. Accompanied with high-interest rates(Figure 5), foreign investment flowed into the Asian regions. Taking advantage of the high-interest rates, Thai banks had started to accumulate large

The Asian Financial Crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown (financial contagion). It is also commonly referred to as the IMF crisis.

* The malignancy of the Asian financial turmoil was derived from the externally-driven currency crisis with the internally induced banking crisis. In other