The 1997 Asian Financial Crisis

The Asia turmoil begun in the middle of summer of 1997. The problem started in Thailand when Bath(known as Thai''''s

curencey) was geting weaker and weaker against US dollars. At that point, the rest of the world started to see that Thai''''s

economy was starting to fall apart. Some pople predicted that the problem would not stay longer than a few months. However,

it was wrong. As manner of fact, the problem spread amongs some of Asian Countries. Even the mighty Japan was effected by

this problem. United stated of America was also effected by this problem. That was a time that the US stock market was going

down due to the fact that Many American cooporation invested in this some of Aisan countries.

Even today, the problem has not been fully recovered and who knows when.

Cause

The main problem of the turmoil is the lack of management. Each countries has all similar problem. As we found out in our

research, we noticed that banking holds the main role and the key player to the turmoil. Many privates and Government

banking loaned too many credit for a big and similar project at the same time without checking the creditor''''s solvency. Of

course among the creditor also, the money supposedly . And this is, of course, the second problem of the cause of the turmoil.

Third, many creditors believe that their project will become successful without a proper preparation and planing.

Solution

Malaysia''''s National Economic Recovery Plan

Causes of the Turmoil in the Region

In today''''s world, large sums of money move across borders and provide more countries with access to international finance.

The daily currency turnover in the foreign exchange market in 1995 is about US$1.2 trillion, compared with an average of

US$190 billion a decade ago. The early 1990s saw the dramatic increase in the flows of private capital from the industrial

countries to the emerging countries. This was partly contributed by pension funds from the United States and Europe in search

for higher returns overseas. The amount of private capital flowing into emerging markets was US$50 billion in 1990; the figure

was US$336 billion in 1996. With greater international capital flows, financial markets become more volatile as money moves

across borders with a mere keystroke of a computer. The unusual successful economic performance in the region attracted

large inflows of foreign portfolio funds into the Asia Pacific region, which became a root cause for the currency crisis. During

the early to mid-1990s, China recorded growth rates between 9-14 per cent per annum, while Indonesia, Malaysia, and