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Asian financial crisis of 1997-1998
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The 1997 and 1998 Asian Economic Crisis
The purpose of this paper is to explore the causes of the 1997 and 1998 Asian economic crisis; and to research the effects of the crisis in each of the following categories:
1. The effects of the crisis in the countries involved in the economic crisis of 1997-98.
2. The effects on the governments affected by the crash, and
3. The effects that the Asian crisis has had on the differing world markets as well as the effects that it will continue to have (if any) on the world markets in the near future.
We will also present our analysis of the causes and our predictions as to what the future will be for the countries involved.
The paper will first look at the causes behind the crash. We can see that the main factors include current-account imbalances, financial over-lending, banking problems, extremely open economies, and a list of other factors. After we look at the causes behind the crash, we will give an analysis of how to avoid these problems in the future and what the repercussions will be in the Asian and Global markets. And at the end of the paper will be our conclusions (including how this has helped to better prepare us in the area of International Financial Management).
The countries affected by the 1997 Asian crisis include the following:
1. Korea
2. Indonesia
3. Malaysia
4. Philippines
5. Thailand
6. China
7. Taiwan
8. Hong Kong (city-state)
9. Singapore (city -state)
Introduction
The Asian economic crash of 1997 surprised more than a few people. Ever since the period after World War II, the Asian economies had been following an economic model developed by the Japanese. This model favored export markets, domestic investment, and lower savings vs. hi...
... middle of paper ...
...alaysia 2.10 -3.74 1.39 -0.11 -1.59 -3.75 0.58
Philippines -5.73 -3.00 -4.27 -8.53 -8.95 -8.80 -9.44 -12.30
Singapore 6.76 10.62 9.29 8.12 14.87 15.38 13.26 12.55
Thailand -7.75 -6.88 -4.70 -4.56 -5.18 -7.09 -6.65 0.14
China 2.75 2.86 1.03 -1.92 1.39 1.68 2.10 4.41
Taiwan 6.82 6.94 4.03 3.16 2.70 2.10 4.05 2.72
TABLE 4.0
GDP Growth.
GDP Growth 1991 1992 1993 1994 1995 1996 1997
Korea 9.13 5.06 5.75 8.58 8.94 7.10 5.47
Indonesia 6.95 6.46 6.50 15.93 8.22 7.98 4.65
Malaysia 8.48 7.80 8.35 9.24 9.46 8.58 7.81
Philippines -0.58 0.34 2.12 4.38 4.77 5.76 9.66
Singapore 7.27 6.29 10.44 10.05 8.75 7.32 7.55
Thailand 8.18 8.08 8.38 8.94 8.84 5.52 -.043
Hong Kong 4.97 6.21 6.15 5.51 3.85 5.03 5.29
China 9.19 14.24 12.09 12.66 10.55 9.54 8.80
Taiwan 7.55 6.76 6.32 6.54 6.03 5.67 6.81
All Graphs Compliments of International Financial Statistics of the IMF
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
report of the national commission on the causes of the financial and economic crisis in
Mid September 2008 saw a significant change for the Australian economy, with the collapse of the Lehman Brothers triggering the Global Financial Crisis. The Global Financial Crisis was characterised by a tightening in the availability of money from overseas markets and resulting in governments having to intervene to maintain market stability. The Australian economy and its leaders generated considerable discussion about the prospect of a global recession, while most expected the financial crisis would have a major impact on the Australian economy, a factor that was not considered was the immediacy of its effects. The December quarter of 2008, saw business stocks devalue by $3.4 billion, the largest fall on record. In addition, there was a considerable softening in property prices, resulting in many companies/people having too much debt vs. too little wealth. With this, consumer confidence plummeted which in turn deteriorated consumption. Throughout the month of September and into October, the financial crisis spread from the United States to Europe, and all around the global economy, with economies contracting in growth.
Throughout all of my research over the recession of July 1990-March 1991 I have concluded that it was not one of the largest recessions the United States has ever seen, but it was also not the smallest. This recession was only eight months long and did some damage, but not a lot. The Gulf War had the biggest impact on this recession along with the oil spill causing a rise of oil prices. The economy hit a low point and was not able to come out of it until the following year after the recession had already technically ended. Unemployment rates were at a low point towards the ending of the recession and because companies were hesitant about hiring new employees’ unemployment did not start getting better until the following year after the recession ended.
Regarding “The Age of Globalization” by Alan Brinkley I thought that the reading selection provides good details on timeline of significant events that significantly affected the global economy. The reading selection from the American History textbook starts off with a summary of event of September 11, 2001, and the role they played in the changes within global economy. On the next page we are presented with a timeline of events that will be described later in the reading selection. The purpose of this section is to illustrate how each of those events contributed to the world we live in today, particularly their influence on the global economy.
Banks all around, especially the large ones, sought to support the market before it could crash down. As the stock prices crashed, banks struggled to keep their doors open (“Economic Causes and Impacts”). Unfortunately, some banks were unsuccessful. Customers wanted their money out from their savings account before it was gone and out of reach, leaving banks insolvent (“Stock Market Crash of 1929”).
Cabral, R. (2013). A perspective on the symptoms and causes of the financial crisis. Journal of Banking & Finance, 37, 103-117
...one I would like to focus on, it that globalization gets in the way of national democracy.
This paper provides an overview of the crisis, outlines the major causes of the crisis, examine alternative solutions to the problem
There is a close relationship between Gross Domestic Product (GDP) and the unemployment rate as it will relate to the decrease or increase of inflation rate. The inflation rate will increase when GDP and unemployment decreases, because it will affect the purchasing power of the people of a particular country.
Takagi, S. (2010) ‘Applying the Lessons of Asia: The IMF’s Crisis Management Strategy in 2008’, ADBI Working Paper 206. Tokyo: Asian Development Bank Institute. Available from: http://www.adbi.org/workingpaper/2010/03/16/3638.imf.crisis.management.strategy.2008/ [Accessed 10 November 2013]
Debt crisis is becoming common and faced by most citizens in Malaysia. Between June 1997 and January 1998 a financial crisis swept like a brush fire through the "tiger economies" of SE Asian. Over the previous decade the SE Asian states of Thailand, Malaysia, Singapore, Indonesia, Hong Kong, and South Korea, had registered some of the most impressive economic growth rates in the world. Their economies had expanded by 6% to 9% per annum compounded, as measured by Gross Domestic Product. This Asian miracle, however, appeared to come to an sudden end in late 1997 when in one country after another, local stock markets and currency markets imploded. When the dust started to settle in January 1998 the stock markets in many of these states had lost over 70% of their value, their currencies had depreciated against the US dollar by a similar amount, and the once proud leaders of these nations had been forced to go cap in hand to the International Monetary Fund (IMF) to beg for a massive financial assistance. (W.L.Hill, n.d.)
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Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.