Asia is more a geographic term than a homogeneous continent, and the use of the term to describe such a vast area always carries the potential of obscuring the enormous diversity among…. Joseph Stiglitz former World Bank chief economist and now at Columbia University wrote scathing articles against IMF, and even wrote a book about it see below. The Federal Reserve played an active role in informing and supporting the US and global policy responses. Paper presented at conference, U. When it became clear that the tide of capital fleeing these countries was not to be stopped, the authorities ceased defending their fixed exchange rates and allowed their currencies to float. Explicit and implicit government guarantees to bail out domestic industries and banks; cozy relationships between East Asian conglomerates, financial institutions, and regulators; and a wash of foreign financial inflows with little attention to potential risks, all contributed to a massive moral hazard in East Asian economies, encouraging major investment in marginal, and potentially unsound projects. Retrieved 28 August
It will take time before the country can leave behind the rank of 'flawed democracy' as measured by Economist Intelligence Unit for its Democracy Index. Many economists believe that the Asian crisis was created not by market psychology or technology, but by policies that distorted incentives within the lender—borrower relationship. This often led to heavy buying of U. The investors were often ignorant of the actual fundamentals or risk profiles of the respective economies, and once the crisis gripped the region, the political uncertainty regarding the future of Hong Kong as an Asian financial centre led some investors to withdraw from Asia altogether.
Date: August As the government of Indonesia was unable to cope with this crisis it decided to seek financial assistance from the International Monetary Fund IMF in October The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July and raised fears of a worldwide economic meltdown due to financial contagion. Although the rupiah crisis began in July and August , it intensified in November when the effects of that summer devaluation showed up on corporate balance sheets. Japan was also affected, though less significantly.
Hong Kong , Laos , Malaysia and the Philippines were also hurt by the slump. Public revenues and exports collapsed in and due to the repercussions of the Asian financial crisis. But no clear conclusion or consensus emerged. Major emerging economies Brazil and Argentina also fell into crisis in the late s see Argentine debt crisis. The effects of the SAPs were mixed and their impact controversial. Indirect effects included the dot-com bubble , and years later the housing bubble and the subprime mortgage crisis.