Asian Financial Crises 1997

Asian Financial Crises 1997

Nine Asian countries, South Korea, Japan, China, Hong Kong, Taiwan, Singapore, Malaysia, Indonesia and the Philippines were considered as Asian Tigers in the early 1990s. These  economies were rapidly growing due to the inflow of investments, improvements in  technology, increases in education, a ready supply of labor as people moved from the  to the cities to work in factories, and reduced restrictions on trade and commerce leading to free‐market economies. 

In the buildup to the 1997 crisis there was excessive borrowing. This borrowing tended to be for speculative purposes in projects such as retail space, office buildings, hotels, other real estate and other assets. The great inflows of money into these assets caused their prices to rise dramatically, creating a bubble. This speculation was fueled by national banks borrowing excessively from abroad and lending excessively in their home countries. Deregulation in the financial sector led to easy money, which caused many speculative and bad loans to be made.

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