Article: article from journal or magazin.
Understanding the Financial Crisis in Asia
Pacific-Basin Finance Journal
The financial crisis of East Asia in 1997 was largely unanticipated and was characterized by sharp falls in asset prices and currency values in several countries simultaneously. Many empirical models have been developed to predict the occurrence of such crisis. However, the out-of-sample performance of these models is disappointing. Most theoretical explanations of the crisis emphasize the role of banking sector and revolve around models of moral hazard or self-fulfilling runs on liquidity. Empirical tests of the models are, however, rare. Much work remains to be done to explain the contagion, and the effects of equity capital flows.
Financial crisis, Real exchange rate, Moral hazard, Run, Liquidity, Capital flows
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