asian_financial_crisis - ASIAN FINANCIAL CRISIS Prepared by...

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ASIAN FINANCIAL CRISIS Prepared by Ahmet Kurt
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Background Until 1997, Asia attracted almost half of total capital inflow to developing countries High interest rates to attract foreign investors A large inflow of capital and a dramatic increase in asset prices 8-12% GDP growth rates in the late 1980s and early 1990s
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CA / GDP
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Rise of Crisis Started at the beginning of July,1997 in Thailand Penetrated into Indonesia, Malaysia and South Korea Similarities between the structure of both geographical and economics of the region countries Change in the sensitiveness of the investors
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Reasons Weaknesses in the corporate, banking and financial systems poor risk management by banks and lax supervision by authorities Prompt liberalization of short-run capital movements Fixed exchange rate regime pegged to US dollar
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Reasons (cont’d) Enormously expanding foreign debt of private sector Moral hazard and government intervention in lending Inefficiency of international rating institutions in predicting the crisis
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Who were affected? Thailand, Malaysia, Indonesia and South
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asian_financial_crisis - ASIAN FINANCIAL CRISIS Prepared by...

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