Alon and Kellerman (1999) substantiate this theory in that they state that the crisis was a reminiscent of the 'Domino Theory' of 1960's. There are other view points attributing different reasons for the financial crisis in Asian economies. This paper analyzes the competing theories that examine the causes of the Asian financial crisis in the light of several theoretical models established by research studies on the crisis and its causes.
Before discussing the causes and effects of the Asian financial crisis, it is important to study the background for the evolution of the financial crisis in the Asian economies. The default of a large amount of debts by Hanob Steel Corporation of South Korea started off the financial crisis in the region. This default by the steel major was followed by many business failures in the country. (Amitava Chatterji 2003)
Following this there was an uneasy feeling for the speculators about the economic and political developments in the region. Hence in May 1997 they initiated heavy capital outflows from Thailand putting the baht - the currency of Thailand under pressure. ...Show more