South Asian Financial Crisis - South Korea
Southeast Asian experience of the 1970s and 1980s consisted of high growth based on export competitiveness, low debt combined with low and stable inflation. Most of the East Asian countries were running budget surpluses. Macroeconomic fundamentals seemed well and nothing suggested risky policies.
However, the rapid growth of the past decade began to unravel. Asian Financial Crisis, like many others, began with a series of asset bubbles. Large capital inflows began starting in the second half of the 1980s, mainly in terms of short-term portfolio investments or changes in the net foreign asset position of financial institutions. There were sharp increases in asset prices, especially stock prices. During 1992-94, the long-term flows were relatively stable, the key was the short-term capital inflows. Institutions borrowed heavily in dollars, bubble inflated. The bubble burst and the weaknesses in the financial system became obvious to lenders and investors in the first half of 1997.
Click here to find the report.
However, the rapid growth of the past decade began to unravel. Asian Financial Crisis, like many others, began with a series of asset bubbles. Large capital inflows began starting in the second half of the 1980s, mainly in terms of short-term portfolio investments or changes in the net foreign asset position of financial institutions. There were sharp increases in asset prices, especially stock prices. During 1992-94, the long-term flows were relatively stable, the key was the short-term capital inflows. Institutions borrowed heavily in dollars, bubble inflated. The bubble burst and the weaknesses in the financial system became obvious to lenders and investors in the first half of 1997.
Click here to find the report.
I acknowledge my team-members Valentyna Sydorenko, Jakub Kolek, Lika Kranjcev and Hamza Waraich for their efforts
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