The Impact of the Asian Crisis in Malaysia
When the Asian financial crisis hit Malaysia, the impact was traumatic. The stock market, the currency and the property market nearly collapsed.The crisis in Malaysia first began with developments in the Malaysian currency. As a result of the precipitate withdrawal of money from Malaysia, the value of the Malaysian Ringgit began to swing wildly. In July 1997, within days of the Thai baht devaluation, the Malaysian ringgit was "attacked" by speculators. The overnight rate jumped from under 8% to over 40%. This led to rating downgrades and a general sell off on the stock and currency markets. From a value of 2.52 to the US dollar in June, 1997, it went down to 3.2 to the US dollar in September, 1997, just three months after the crisis struck. It reached a new low of 4.5 Ringgit to the US dollar in January, 1998 (Tourres.2003,78,193). This severely exacerbated the decline of the Malaysian stock market, which already had been on a downward trend before the crisis, as the depreciation of the Ringgit led to panic selling by foreign investors.
The huge drop of the Ringgit and the stock market had a devastating impact on highly geared enterprises, particularly those companies that had taken loans from abroad. The sharp decline of the stock market and the spectre of many of these highly geared companies unable even to service interest on loans then created pressure on bank liquidity. This liquidity crunch resulted in a general loss of confidence in the Malaysian economy, and eventually precipitated a massive contraction in the Malaysian economy from 7.3% growth in 1997 to a low of -7.4% in 1998. Per capita income fell from RM9.1 billion to RM8.2 billion in the same period while foreign dire...
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...eal economy and the financial sector as well as the prompt and prudent measures introduced by the Malaysian government during the crisis.
Growth then settled at a slower but more sustainable pace. The massive current account deficit became a fairly substantial surplus. Banks were better capitalized and NPLs were realised in an orderly way. Small banks were bought out by strong ones. A large number of PLCs were unable to regulate their financial affairs and were delisted. Compared to the 1997 current account, by 2005, Malaysia was estimated to have a US$14.06 billion surplus. Asset values however, have not returned to their pre-crisis highs. In 2005 the last of the crisis measures were removed as the ringgit was taken off the fixed exchange system. But unlike the pre-crisis days, it did not appear to be a free float, but a managed float, like the Singapore dollar.
What Gekko is referring to is one of the worst stock market crashes in history known as “Black Monday”. This stock market crash began from Hong Kong and spread west to Europe, hitting America after other stock markets have already been shredded. In Australia and New Zealand, the 1987 crash is also known as "Black Tuesday" because of the time zone difference. What made this nightmare happened? Well, the most popular explanation is selling by program traders, most notably as a reaction to the computerized selling required by portfolio insurance hedges. After Black Monday, regulators overhauled trade-clearing protocols to bring uniformity to all prominent market products. They also developed new rules, known as "trading curbs" or colloquially as circuit
report of the national commission on the causes of the financial and economic crisis in
CONCLUSION Financial Crisis 2008, this happened even after so many information, knowledge, expertise, analyst were existing. But it happened and it denoted the market was running with lack of major information. And it all impacted to all over the world and the impact of 2008 financial crises still showing in current years. And from then people are taking safe step while taking loans, insurance facilities etc.
This paper provides an overview of the crisis, outlines the major causes of the crisis, examine alternative solutions to the problem
The inflation rate of Thailand was the lowest during 1998. From 1997 to 1998, to solve the Asian financi...
The results illustrate that, the inflation and exchange rate has a positive relationship and it is significant related in Philippine. In this research, researcher said that exchange rate depreciate when the inflation in government debt raise.
As the market was crowded with inexperienced but feverishly eager investors who lacked capital reserves, the falling prices produced a shock effect...
...nt of the CPI, which ultimately led to a decay of inflation to 11.8%, an additional miss of the single digit target in 2002. There was also conversation rate immovability coupled with a decline in the prime rate which was presented during the NPP government in 2004 to exchange the bank rate. This replicated in a fall in interest rates which is a lift to savings and general productivity of the economy.
Malaysia is located in the south-eastern Asia, bordering Thailand and northern one-third of the island of Borneo, bordering Indonesia, Brunei, and the South China Sea, south of Vietnam. Due to its locations, it has been colonised since the late 18th centuries by many countries. Since 1965, Malaysia has had one of the best economic records in Asia, with GDP average of 6.5% growth for almost 50 years. The economical development especially boosted during 1981 and 2003 under the governance of Prime Minister Mahathir bin Mohamad. Malaysia succeeded in diversifying its economy from dependence on exports of raw materials to expansion in manufacturing, services, and tourism. Also, the current Prime Minister continues to pursue pro-business policies .
And by this all economy get a boast. People started getting better off and government got success keeping the interest of investor in economy. Balance to payment went down to 5, which is not bad. Bibliography Books 1. Diulio, Eugene A. Theory and Problems of Macroeconomic Theory.
Radelet, Steven, and Jeffrey D. Sachs. “Currency Crises.” The National Bureau of Economic Research. National Bureau of Economic Research, Jan. 2000. Web. 10 Dec. 2013. .
The relationship and cooperation in handling the issue in Southern Thailand between Malaysia and Thailand government since a long time ago, has become disappointed, frustration and unsatisfied. This is might be best description that has been looked up since the working relations between past Thai governments and their Malaysian counterparts was comes to Southern Thailand (Thanet, 2013). For the Thailand government, cooperation with the Malaysian authorities is really needed while in dealing with the separatist insurgents that often to the slip across the porous border from Thailand. Meanwhile, for the Malaysian side, through the sharing of same ethnicity and Islamic religion in the Southern Thai Muslims, was means that their politicians ought to have a key role to play in understanding and resolving insurgency issues in Southern Thailand. Therefore, it might can be seem in logically think that, without the help by the Malaysian government, the issues that regards to Muslim separatist moments in the Deep South would be difficul...
Time will occur start with economic downturn, political unstable, lost of confident level of the investor for the reason of diseases that present that time. It is also possible that they are no more country we call Malaysia.
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.
The above estimation has left some questions pertaining to fill the gap by attempting to identify and measure factors that determine the profitability performance of commercial banks in Malaysia. What are bank-specific determinants and macroeconomic determinants influence on banks’ profitability in Malaysia compare to other countries? Do capitalized bank is contribute more on bank performance compare to other variables? Did relationships between determinants of banks’ profitability change during the financial crisis? This study therefore, intends to examine the bank specific and macro determinants on banks’ profitability, the impact capital and financial crisis on banks profit. To answer the research questions, the dissertation selected 27 commercial banks in Malaysia including local and foreign banks to fill this gap.