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Bad Lending Leading to the East Asian Crisis In 1990s - Essay Example
Finance & Accounting
Pages 10 (2510 words)
Prior to the recent global economic crisis of 2008, world financial markets had to witness the East Asian economic turmoil during the year 1997. The economic crisis in East Asia was escorted by bad lending practices which resulted in the devaluation of currencies, reduction of exports, loss of economic credibility and adverse economic growth. …
Bad Lending Leading to the East Asian Crisis In 1990s
The East Asian economic crisis was later analysed as caused by several external and internal stimuli such as improper maintenance of financial market activities, inadequate foreign borrowing and absence of inducements towards risk management among others (Dullum & Kulkarni, 2005). Considering this aspects, this essay will describe how different activities resulted in high lending activities in East Asian economies causing a crisis situation. The objective of the essay is to analyse and describe the main economic problem that triggered the economic crisis in East Asian nations. Hence, the rationale for choosing this topic is to understand various facets which can lead to bad economic crisis with the aim to gain knowledge regarding measures which can be implemented to avoid such circumstances. Major Features of Asian Economic Crisis In the year 1997, when the financial crisis was identified, International Monetary Fund (IMF) reported that the situation was fundamentally caused due to the inefficiency of East Asian financial markets to manage its foreign debt as well as lending policies. As soon as this crisis hit, IMF assigned that it was the responsibility of East Asian capitalism. This occurrence was further observed to have created a significant impact upon the Asian financial markets including Indonesia, Korea, Thailand, Malaysia and Philippines. In these nations, bank lending dues on private organisations had increased remarkably before and during the crisis situation. ...