This paper examines the impact of the Asian crisis on bank stocks across four Western countries and six Asian countries. In the second half ofWestern banks experienced positive returns. Most of this poor performance is explained by the exposure of the banks to general stock market movements in their countries.
Typically countries experienced rapid devaluation and capital outflows as investor confidence turned from over-exuberance to contagious pessimism as the structural imbalances in the economy became more apparent. Due to the financial instability, the IMF was requested to intervene. Unlike the debt crisis in Latin America, the debt crisis in East Asia stemmed from inappropriate borrowing by the private sector.
A warning tremor on May 14 this year presaged the start of massive selling in July. By the end of September, the baht was worth At the time of the Mexican currency crisis almost three years ago, there was concern that sparks from that fire might spread to Asian currencies.
Traces the economic development of Thailand sincereferring to relevant research, and analyses the reasons why it was the first Southeast Asian country to collapse in the economic crisis: large current account deficits, excessive external debt, a collapse in the property sector, exchange rate mismanagement and political instability. Considers its future prospects and shows statistics on economic growth and inflation for the world as a whole and various countries and groups within it. Julian, C. Please share your general feedback.
The Asian financial crisis, also called the "Asian Contagion," was a sequence of currency devaluations and other events that began in the summer of and spread through many Asian markets. The currency markets first failed in Thailand as the result of the government's decision to no longer peg the local currency to the U. As a result of the devaluation of Thailand's baht, a large portion of East Asian currencies fell by as much as 38 percent.
Authors: HarvieC. As witness to one of the world's great crises in recent times, academics and students, business people, national and international government analysts, policy makers and political leaders worldwide have been pre-occupied by an effort to adequately unravel or sufficiently understand the factors that have brought about the so-called Asian financial, currency or economic crisis and hopefully to find plausible cures or solutions to it. This book examines the impact of economic globalization in developing economies and it applies empirical studies of all of the major countries to theoretical perspectives on the crisis.
The beginning of the Asian financial crisis can be traced back to 2 July This became the trigger for the Asian currency crisis. Within the week the Philippines and Malaysian Governments were heavily intervening to defend their currencies, while Indonesia intervened and also allowed the currency to move in a widened trading range-a sort of a float but with a floor below which the monetary authority acts to defend the currency against further falls.
In Thailand, the financial crisis has resulted in adverse impacts on economic and social systems more seriously than anyone could anticipate. This crisis originated from problems in many sectors: finance, real production, government and management. Since financial liberalization of the early s, 1 foreign capital has been attracted to the country by high profit margins in stocks, high interest rates, and a relatively lower risk in Southeast Asia, due to the US dollar-pegged currency Lauridsen
On July 2,Thailand devalued its currency relative to the US dollar. Malaysia, the Philippines, and Indonesia also allowed their currencies to weaken substantially in the face of market pressures, with Indonesia gradually falling into a multifaceted financial and political crisis. Hong Kong faced several large but unsuccessful speculative attacks on its currency peg to the dollar, the first of which triggered short-term stock market sell-offs across the globe.
Governments in both mature and emerging economies no doubt draw lessons from financial crises in order to adopt measures to prevent their recurrence. However, it is often the case that such measures are designed to address the root causes of the last crisis but not the next one. More importantly, they can actually become new sources of instability and crisis.