East Asian financial crisis are an evidence of fact that economies are prone to fianacial pressures in spite of a stable sustainable growth rate. The East Asian economic crisis is the most important economic event in the region of the past few decades. That much is agreed. Beyond this, there is yet no unanimity about its root causes nor about the solutions. The differences of views are being debated in academic and policy circles and reflected in the media. One thing though is certain: the earlier optimistic expectation that it would last only some months has proved wrong. Instead the financial crisis has been transformed into a full-blown recession or depression.
Moreover the threat of depreciation has spread from a few countries to many in the region, and is spreading to other areas such as Russia, South Africa, and possibly Eastern Europe and South America.
The objective f this term paper is to analyze the
? factors behind the east asian crisis
? Background
? Finacial liberalization
? Policy implication.
Back ground of Crisis.
The great debate on causes is whether the blame should be allocated to domestic policies and practices or to the intrinsic and volatile nature of the global financial system.
In the first phase of the crisis, as it spread from Thailand to Malaysia, Indonesia, the Philippines, then to South Korea, the international establishment (represented by the IMF) and the G7 countries placed the blame squarely on domestic ills in the East Asian countries.
They cited the ill judgment of the banks and financial institutions, the over-speculation in real estate and the share market, the collusion between governments and businesses, the bad policy of having fixed exchange rates (to the dollar) ...