The Asian Financial Crisis

Paper Summary:

The paper looks at the role of the International Monetary Fund (IMF) and how its policies and oversights made problems worse in Southeast Asia and looks at Korea as an example. The paper looks briefly at the role of "crony capitalism" in Southeast Asia and focuses on Malaysia and Thailand in particular. The paper also examines structural factors, reviews the inherent irrationality of investors and explains the role of capital control regulations and premature liberalization in producing or deepening the crisis. The paper concludes that the IMF must allow developing nations to take matters into their own hands when looking at structural issues, while those countries must develop comprehensive oversight and "firewalls" that reduce cronyism and incompetence.

From the Paper:

"The causes of the Asian Financial Crisis of 1997 are too numerous to be easily synthesized into one neat capsule. Nonetheless, looking at the matter from afar, it appears as though there was excessive foreign borrowing, far too much over-lending (although it is not clear if this over-lending was domestic, it may be inferred that too much bank capital went towards dubious, speculative ventures) and such an over-reliance upon foreign capital that, when the industrial sector began to slow down, the outflow of foreign capital was utterly debilitating."

Sample of Sources Used:

• Bello, Walden and Shalmali Guttal. "Crisis of Credibility," Multinational Monitor, 26.7/8 (2005): 19-22.
• Bhattacharya, Anindya K. "The Asian Financial Crisis and Malaysian Capital Controls." Asia Pacific Business Review, 7.3 (2001): 181-193.
• International Monetary Fund. "The IMF's Response to the Asian Crisis." International Monetary Fund: A Fact Sheet. Jan. 1999. IMF. 20 Apr. 2007 <http://www.imf.org/external/np/exr/facts/asia.htm>
• Kaplan, Ethan, and Dani Rodrik. "Did the Malaysian Capital Controls Work?" Feb. 2001. Kennedy School of Government (Harvard). 20 Apr. 2007 <http://ksghome.harvard.edu/~drodrik/Malaysia%20controls.PDF>
• Kim, Suk H., and Mahfuzal Hague. "Asian Financial Crisis of 1997: The Causes and Policy Responses." LookSmart: FindArticles.com. 2002. LookSmart, Ltd. 21 Apr. 2007 <http://findarticles.com/p/articles/mi_qa3674/is_200204/ai_n9026596/pg_7>

More papers on The Asian Financial Crisis:

• Cause and Effect Essay # 133287 : "The Asian Financial Crisis: Appropriate Remedies for the Next Time"
• Cause and Effect Essay # 2808 : "Causes of the Asian Financial Crisis"
• Essay # 51861 : "The Asian Financial Crisis"
• Analytical Essay # 130917 : "External Factors in the Asian Financial Crisis of 1997-1998"

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