Economic Fundamentals or Financial Panic? An Empirical Study on the Origins of the Asian Crisis

Ryuzo Miyao

No 151, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: The existing discussions about the origins of the Asian crisis can be summarized into two broad views: the "economic fundamentals" view and the "financial panic" view. This paper attempts to distinguish between these two views empirically by testing external solvency and examining intertemporal borrowing constraints of the three most-affected countries: Thailand, Indonesia and Korea. The evidence indicates that while the external solvency condition was generally satisfied in Indonesia and Korea in the pre-crisis period, it was not in the case for Thailand with a sample extending to the 1990s when massive capital inflows took place and external liabilities of the economy became unsustainable. This suggests that poor economic fundamentals were the main origins of the Thai crisis while financial panic was a more plausible cause of the Indonesian and Korean crises.

Keywords: Asian crisis; Economic fundamentals; Financial panic; External solvency; Intertemporal borrowing constraints (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-03
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp151.pdf First version, 2004 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:151

Access Statistics for this paper

More papers in Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University ().