StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Bad lending leading to the East Asian crisis in 1990s - Essay Example

Comments (0) Cite this document
Summary
Name: Tutor: Course: Date: University: Bad Lending Leading to East Asia Crisis in 1990s Introduction The crisis in East Asian is among the most critical events in the recent past. The crisis did not only affect East Asia alone, but it impacted the worldwide crisis in 1990s, among them being like Russia in 1998, Brazil in 1998-1999, and Mexico in 1995…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.3% of users find it useful
Bad lending leading to the East Asian crisis in 1990s
Read Text Preview

Extract of sample "Bad lending leading to the East Asian crisis in 1990s"

Download file to see previous pages 347). The basic diagnosis attributed the crisis to the financial chaos caused by the financial systems riddled by the insider dealings, weak corporate governance, and corruption that caused inefficient spending investment. This weakened stability in the banking system. The economies in East Asia were successful for generations, and the crisis in1997 was unanticipated despite Yung Chul Park (1996) warning against impending crisis. Many foreign investors invested a lot of funds even at the onset of the crisis (Choe and Chinmay 2007, p. 232-255). This paper investigates on the bad lending that led to the financial crisis in East Asia in 1990s. This is because of the success of economies in East Asia that led to massive financial inflows in years leading to crisis, with few warning signs. Background to financial crisis Central to the full understanding of the cause of East Asian crisis is multifaceted evidence on the structure of the incentives used by financial and corporate sectors, which operated in the area. The moral problem magnified the financial vulnerability during the liberalization of the market in 1990s. This exposed fragility concerning the macroeconomic and the financial shocks that occurred between 1995 and 1997. This problem exhibited the three different, yet interrelated dimensions at corporate, the financial and the international level (Choe and Chinmay 2007, p. 232-255). The political pressures at the corporate level maintained high economic growth rates that guaranteed the private projects under government control. Even in the absence of the explicit bail-out promises, strategies and production plans of the corporate sector overlooked the riskiness and the costs of the investment projects. The industrial and financial policy enmeshed in the widespread business sector of political and personal favouritism and markets operated under the impression of their investment returns being insured from the adverse shocks. This represented underpinnings of the sustained process of accumulation of capital leading to account deficits. The investment rate remained high because of the fall in interest rates of neighbouring countries like Japan. As a result, banks borrowed excessively from abroad as well as lending excessively at home (Ichikawa 1998, p. 155-179). Extensive liberalization of the capital markets consistently provided large supply of funds at minimized costs to the domestic, corporate sector and national financial institutions. This motivated the exchange rate policies that reduced volatility of domestic currency in US dollars lowering the risk premium on the dollar-denominated debt. Internationally, moral hazard hinged on behaviour of the international banks. Over the period that led to crisis, international bands rented a lot of funds to the domestic intermediaries in the region neglecting the risk assessment standards. They presumed the direct government guarantee to the short-term interbank liabilities through bailout using the IMF support programs (Ichikawa 1998, p. 155-179). The stagnation of economy in Japan in 1990s lowered the exports from Asian countries. Few months before the crisis in East Asia, economy of Japan declined significantly, thus shattering the recovery process. The fall in ‘semi-conductors’ demand in 1996, and the adverse fluctuations in trade worsened the trade balances between 1996 and ...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Bad lending leading to the East Asian crisis in 1990s Essay”, n.d.)
Bad lending leading to the East Asian crisis in 1990s Essay. Retrieved from https://studentshare.org/macro-microeconomics/1402408-bad-lending-leading-to-the-east-asian-crisis-in
(Bad Lending Leading to the East Asian Crisis in 1990s Essay)
Bad Lending Leading to the East Asian Crisis in 1990s Essay. https://studentshare.org/macro-microeconomics/1402408-bad-lending-leading-to-the-east-asian-crisis-in.
“Bad Lending Leading to the East Asian Crisis in 1990s Essay”, n.d. https://studentshare.org/macro-microeconomics/1402408-bad-lending-leading-to-the-east-asian-crisis-in.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Bad lending leading to the East Asian crisis in 1990s

Managing and Leading a Winning Team

This type of environment is differentiated from the task environment which is the ‘closest environment of the organization and its particular elements have a direct influence on the organization; this environment is typically composed of factors such as consumers, competitors, suppliers, labor market, industry, and financial resources’ [1]
In order for the external environment to be located and evaluated, a large questionnaire survey in North Greek industries was carried out between January 2003 and June 2003; a sample of 600 Greek private organizations was used from the main Greek directory ICAP; The sample was obtained by employing the stratified methodology. The strata were "manufacturing", "trade" and "service...
7 Pages (1750 words) Assignment

An Asian Miracle - Myth or Reality

To this was added the ‘entered’ Philippines (Billington, 1997). Japan experienced year after year of economic growth for 30 years while the other countries could sustain it only up to the mid-1990s.
Each of these countries had adopted strategic macroeconomic management disciplines. Rather than allow their country to be ‘colonized’, by foreign capital, they preferred to take their own initiative. The state played a key role in each case by way of mobilizing resources, supporting technology transfer, and inviting Foreign Direct Investment from developed countries. South Korea, Taiwan, Thailand, Indonesia, and Malaysia also received support from International economic agencies like the IMF, World Bank, AD...
6 Pages (1500 words) Assignment

Analysis of the Key Factors Leading to a Successful Project

Theorists also have given their opinion regarding the nature of planning a successful project. The combined study of all the works of others and analysis of the previous projects would give a better vision regarding what is a successful project plan. As an executive summary has to say the following, regarding the factors or key factors that lead to a successful project.

The success begins from the point of how we select the scope of the project or to be more precise on how we clearly understand the scope of the project. And organizing the project plays a prominent role in its success. Concentrating on the impact will also work possible for the success of the project. The Executive Summary says that the project should be...
8 Pages (2000 words) Business Plan

The Leading Role in the European Literature of Leo Tolstoy

In contrast to other writers of his generation, Tolstoy was connected with noble families of the Russian aristocracy, who had brilliant French pronunciation and manners. At the same time, he was a person full of antagonism. When Leo was nine he became an orphan. Tolstoy’s upbringing was in the hands of Madam Egorsky. Having lost the parents Tolstoy became a rather difficult child. He was a naughty boy with unexpected deeds, thoughts, ideas, but very kind-hearted (Derrick Leon, 1944, p. 54).

In contrast to other writers of his generation, Tolstoy was connected with noble families of the Russian aristocracy, who had brilliant French pronunciation and manners. At the same time, he was a person full of antagonism. Whe...
8 Pages (2000 words) Term Paper

Leading Stragegic Change

The approach emerging today is to use the growing body of ideas and systematic thought to consider innovatory ideas on organization and to adopt a more systematic comprehen¬sive look at problems so that we look at the whole instead of looking at separate parts (Beer & Nohria 2000). Sustainable strategic organizational change can be explained as a continuous change that affects all areas of business activities. This change entails developing a business process model of how activities function, analyzing relationships among business units and implementing changes that would eliminate redundant processes and make business units more effective. Performance deficiencies result from a motivational problem that is closely connect...
13 Pages (3250 words) Term Paper

The American Nation: A Melting Pot of Asian Americans

As a result, American society is experiencing dramatic transformations (Skop & Li, 2005).
The Asian community in the United States is a cultural group that has assumed form since the passing of the 1965 immigration legislation. Even though Asians have been arriving in the United States since the middle of the 1980s, only in the previous four decades have the waves been remarkable. At some stage in that period, the U.S. Asian population has increased dramatically, and Asians one of today’s fastest-growing ethnic and racial minorities in the nation (ibid).
Asian immigration to and settlement in the United States is somewhat well recognized. Generally, Asian immigrants are geographically concentrated, with the imm...
7 Pages (1750 words) Assignment

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages (5000 words) Literature review

Englands Leading Health Service

In reality, the United Kingdom is composed of tens of millions of people who differ in various aspects such as race, age, literacy, and gender to mention but a few. As such, the NHS encounters challenges while broadcasting its services due to these variant factors, and needs to have mitigation measures set to address such. To elaborate on these challenges, the following discussion text will highlight language as a potential limitation to the effective offering of healthcare facing the NHS and what measures if applied will address such, in project form.
According to the Royal College of Physicians (2013, n.p.), the NHS faces recurring and future challenges in its execution of services, and this calls for it to regularly review...
9 Pages (2250 words) Assignment

The Role of Strategic Planning in Crisis Management in the Organizations of Civil Society

The objectives of this thesis could be described as follows: a) to show that strategic planning can be valuable in organizations of civil society, b) to show how strategic planning can be used in crisis management and c) to make clear that crisis management in organizations of civil society can be effective only if a specific process, i.e. strategic planning is employed.

For achieving the objectives described above the following research questions need to be answered: a) which is the role of strategic planning in organizations of civil society, b) which are the most common forms of strategic planning in these organizations, c) is strategic planning able to support crisis management in general? If yes, would this role of...
10 Pages (2500 words) Thesis Proposal

Towards Solutions to the US Debt Crisis

The national debt became 32% of a gross domestic product after the First World War (Chantrill, 2014, Para 1).
The Great Depression then followed, where the then President decided to boost the national debt to 40% of the gross domestic product. He did this by using his way; the local governments also did the same thus improving the state debt by over 5% of the gross domestic product. In 1993, the domestic public debt was over 28%. The state, federal, and government debts all rose by seventy percent of the GDP (Chantrill, 2014, Para 2).

Unfortunately the United States into a new debt in the Second World War. In 1941, the gross domestic product was 45 percent; it rose up to 119 percent in 1946 probably at the end of t...
6 Pages (1500 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Bad lending leading to the East Asian crisis in 1990s for FREE!

Contact Us