Chapter 5 Thoughts on the Origins of the Asian Crisis: Impulses and Propagation Mechanisms
- International Monetary Fund
- Published Date:
- January 2001
The 1997–98 Asian crisis can be explained largely in terms of impulses and amplification mechanisms related to fundamentals, specifically general weaknesses in the financial sector, including relationship lending practices, excessive risk taking, and inadequate financial supervision and regulation. Although elements of illiquidity-based financial panic may also have played a role, it is difficult to determine whether the motivation for the panic was based in a spontaneous shift in creditor confidence or to concern about fundamentals.