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Asia's Financial Crisis: Lessons and Policy Responses

Author

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  • Moreno, R.
  • Pasadilla, G.
  • Remolona, E.

Abstract

This paper argues that fundamental weaknesses in Asian financial systems that had been masked by rapid growth were at the root of East Asia's 1997 currency and financial crisis. These weaknesses were caused by the lack of incentives for effective risk management created by implicit or explicit government guarantees against failure. The weakness of the financial sector was accentuated by large capital inflows, which were partly encouraged by pegged exchange rates.

Suggested Citation

  • Moreno, R. & Pasadilla, G. & Remolona, E., 1998. "Asia's Financial Crisis: Lessons and Policy Responses," Papers 98-02, Economisch Institut voor het Midden en Kleinbedrijf-.
    • Handle: RePEc:fth:midkle:98-02
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    Cited by:

    1. Robert Trudel, 2005. "Effects of Exchange Rate Regime on IMF Program Participation," Review of Policy Research, Policy Studies Organization, vol. 22(6), pages 919-936, November.
    2. Bank for International Settlements, 2008. "India’s financial openness and integration with Southeast Asian countries: an analytical perspective," BIS Papers chapters, in: Bank for International Settlements (ed.), Regional financial integration in Asia: present and future, volume 42, pages 181-201, Bank for International Settlements.
    3. Stefan Hohl & Patrick McGuire & Eli Remolona, 2006. "Cross-Border Banking in Asia: Basel II and Other Prudential Issues," World Scientific Book Chapters, in: Gerard Caprio Jr & Douglas D Evanoff & George G Kaufman (ed.), Cross-Border Banking Regulatory Challenges, chapter 8, pages 87-107, World Scientific Publishing Co. Pte. Ltd..
    4. Cohen, Benjamin H. & Remolona, Eli M., 2008. "Information flows during the Asian crisis: Evidence from closed-end funds," Journal of International Money and Finance, Elsevier, vol. 27(4), pages 636-653, June.
    5. Serge Jeanneau & Marian Micu, 2002. "International bank lending to emerging market countries: explaining the 1990s roller coaster," BIS Quarterly Review, Bank for International Settlements, March.
    6. W N W Azman-Saini & M S Habibullah & Siong Hook Law & A M Dayang-Affizzah, 2007. "Stock Prices, Exchange Rates and Causality in Malaysia: A Note," The IUP Journal of Financial Economics, IUP Publications, vol. 0(1), pages 7-13, March.
    7. Evrensel, Ayse Y. & Kutan, Ali M., 2007. "IMF-related announcements and stock market returns: Evidence from financial and non-financial sectors in Indonesia, Korea, and Thailand," Pacific-Basin Finance Journal, Elsevier, vol. 15(1), pages 80-104, January.
    8. Jean-Pierre Allegret & Marie-Noëlle Calès, 2001. "Attaques spéculatives et crédibilité du régime de change. Quel arbitrage pour le policy-mix ?," Revue Économique, Programme National Persée, vol. 52(2), pages 249-264.
    9. Kwack, Sung Yeung, 2000. "An empirical analysis of the factors determining the financial crisis in Asia," Journal of Asian Economics, Elsevier, vol. 11(2), pages 195-206.
    10. Carlo Castellana, 2012. "Impact of the economic crisis on the Italian public healthcare expenditure," Papers 1205.2863, arXiv.org.
    11. Jian Tong & Chenggang Xu, 2004. "Financial Sector Returns and Creditor Moral Hazard: Evidence from Indonesia, Korea, and Thailand," William Davidson Institute Working Papers Series 2004-687, William Davidson Institute at the University of Michigan.
    12. Catherine Koch & Eli M Remolona, 2018. "Common lenders in emerging Asia: their changing roles in three crises," BIS Quarterly Review, Bank for International Settlements, March.
    13. Joe Brocato & Kenneth Smith, 2012. "Sudden equity price declines and the flight-to-safety phenomenon: additional evidence using daily data," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(3), pages 712-727, July.
    14. Reuven Glick, 1998. "Thoughts on the origins of the Asia crisis: impulses and propagation mechanisms," Pacific Basin Working Paper Series 98-07, Federal Reserve Bank of San Francisco.

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    More about this item

    Keywords

    ASIA ; FINANCIAL MARKET ; FINANCIAL POLICY;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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