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The Asian financial crisis of 1997-98

The Asian financial crisis of 1997-98 started with the devaluation of the Thai baht in July 1997 and was followed by financial panic that spread to Malaysia, Indonesia, the Philipines and South Korea (albeit to a lesser extent). What do you think are the main causes of this crisis? Are there factors that are critical in any explanation and which may indicate that a crisis is imminent?

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First and foremost, the people lost confidence and the country went into extreme debt. The first thing to happen was the real estate driven economy collapsed. The baht, tied to the dollar, could not recover from the financial debt created from overextended credit. This lead to financial assets and stock devaluation and the currencies value dropping along with some that currency that failed.

These were the major reasons for the collapse. Some of the lesser reasons were the panic of foreign investors and private debt increases in Asian countries. When the ...

Solution Summary

The Asian financial crisis of 1997-98 are examined.