KBA1195R
FIN365 : INTERNATIONAL BANKING
ASIAN FINANCIAL CRISIS
(1997-1998)
MOHAMMAD SYAHRIZAN BIN RUBIN (2021108877)
ALIF NAZRAN BIN MOHD AZEMI (2021124671)
AMSYAR HADIF BIN AHMAD (2021107669)
MUHAMMAD EIMAN BIN MOHD ZAKRI (2021108113)
NIK AQBAR HAFIZ BIN ANUAR (2021122795)
INTRODUCTION OF FINANCIAL CRISIS
(1997-1998)
The Asian Financial Crisis of 1997–1998 was a significant economic event that impacted
numerous countries in East and Southeast Asia.
A currency crisis began when Bangkok delinked the Thai baht from the US dollar, causing a
string of currency devaluations and large outflows of money.
In the first half of the year, the value of the South Korean won dropped by about 50%, the
value of the Indonesian rupiah by 80%, the Thai baht by more than 50%, and the value of the
Malaysian ringgit by 45%.
The Asian nations had significant hardships following the global financial crisis.
OVERVIEW THE CRISIS CAUSES AND
.
The crisis began in Thailand in July 1997. FACTORS OF ASIAN
Events in 1997 and 1998 can also be seen as a FINANCIAL CRISIS
crisis of governance at all important political
levels. domestic businesses and financial institutions were
The most affected economies reported a drop in able to easily access foreign funds to finance domestic
capital inflows of over $100 billion in the first year investment
of the crisis.
The scale and impact of the Asian financial crisis
were enormous, and it spread to the economies of
excessive borrowing led to excessive investment in risky
Brazil and Russia, and then turned into a global
or low-return
catastrophe.
IMPACT ON AFFECTED the currency crisis was preceded by real exchange rate
appreciation and the ensuing current account deficits
COUNTRY
i). a large number of businesses and financial
institutions in the affected nations had taken out
foreign currency loans without the necessary POLICY RESPONSES
safeguards.
AND INTERVENTIONS
iI). there was an increased chance of a liquidity
attack, which would have the same effects as a bank 1. Main goals were to stabilize economies and restore market
run, because a large portion of the debt was short- liquidity through official external financing access.
term while they assets had longer terms. 2. Monetary policy was also put into place to counteract the
impacts of the crisis (Monetary Policy: Stabilizing Prices and
Output, 2021)
iII). there was a great chance of asset price
3. Central Banks throughout Southeast Asia employed various
deflation because prior to the crisis, these
methods to provide stability and restore confidence in foreign
countries' equities and real estate markets had
investment
seen substantial price growth.
LONG-TERM LESSON LEARN FROM
EFFECTS AND RECOVERY THE CRISIS
be cautious about asset bubbles.
i). Economic Restructuring
realize how important it is to keep sound
ii). Financial Sector Reforms macroeconomic fundamentals.
demonstrated the significance of corporate
iv). Corporate Restructuring governance and transparency.
the crisis emphasized the significance of better
v). Strengthened Financial Governance regulatory oversight, accounting, and auditing
standards.
