East Asian Currency Crisis Of 1997-1998 – Coursework Example
East Asian currency crisis of 1997-1998 East Asian currency crisis of 1997-1998 Source Materials i. What Caused the Asian Currency Crisis? by Giancarlo Corsetti; Paolo Pesenti; and Nouriel Roubini.
ii. The Asian Financial Crisis by Charles W.L. Hill.
Causes of the Crisis
The economic crisis which befell the East Asian region was a result of the economic blunders such as heavy foreign borrowings and poor banking policies. These resulted into economic instability which later spread from one country (beginning with Thailand) to another (Pempel, 2004). Besides, it resulted from non-economic causes such as poor political leadership and banking policies. As Hill exclaims, most of these countries were overexcited about the Asian miracle which they believed would not bring any challenge to the government. They were too confident about their prosperity. Thus, several laws touching on banking policies were not taken seriously (Delhaise, 2007). For instance, the central banks never took any serious measures to regulate the behaviors and lending policies of the commercial banks.
Why People Failed to Prevent the Crisis
Actually, people failed to prevent the occurrence of this crisis because it could not be anticipated. Several economic analytics could not predict it either. Thus, reputable figures like Paul Krugman acknowledged having been able to make wrong predictions because of their preoccupation by the Asian ‘miracle’. It was not easy to prevent this crisis because during the time of it happened; the countries in this region were really prospering (Delhaise, 2007). Their economy was doing so well to the extent that no one could think about any economic crisis anytime soon. May be, if the analytics were keen, they would have helped to prevent this crisis by making right predictions.
Would Better Analytics have helped the Crisis?
Yes. Better analytics would have helped to prevent this situation before it developed into a crisis. They would do this by making the right predictions on the earlier indications of the recession in Thailand before it spread to other countries (Delhaise, 2007). This would help a great deal.
Delhaise P.F. (2007) Asia in Crisis: The Implosion of the Banking and
Finance Systems. John Wiley & Sons.
Pempel, T. J. (2004) The Politics of the Asian Economic Crisis. Ithaca, NY:
Cornell University Press.