The document summarizes the Asian financial crisis that began in July 1997. It provides an overview of the timeline of events, including countries that faced economic troubles and sought assistance from the IMF. It then discusses some of the key causes of the crisis, such as poor economic regulation, overinflated asset prices, and fixed exchange rates. The document also examines the impact and history of the crisis, as well as theories around what fueled the bubble economy. It concludes with recommendations for preventing future financial crises, such as improving global coordination and regulation.

1. By –
Hitendrasinh Zala
Ketan Changani
Ruchi Gattani
Shoaib Qureshi
Vishal Bhatnagar

2. Overview of Crisis
 The Asian financial crisis is considered to have started on July
2, 1997 with the devaluation of the Thai baht and ask IMF for
assistance.
 Malaysia blames the speculators on July 14
 Philippines seek assistance form IMF
 Indonesia floats on August 14, go to the IMF on October 8
 Global stock market decline on October 27
 S. Korea devalue Nov. 28 and ask for IMF assistance
 Spread over other Asia countries

3. Causes
 Poor Regulation of the Economy
 Over-Inflated Asset Prices
 Macroeconomic Policy: Fixed Exchange Rates

4. History
 The reason for economic growth in Southeast Asian countries
was the high interest rates on investments they offered
 USA came out of recession & started offering high investment
rates which made them the new destination for investments

5. History
 China reformed its export policies
 The Southeast Asian countries growth was majorly due to
investments & not the actual growth

6. Impact of the Crisis
 Negative ‘wealth effect’ on investors across the world  Falls
in Equity Markets
 International Trade: break on the growth of exports from the
major economies .5% of GDP in Japan, 1½% of GDP in Europe
and 3% in the US
 Import side prices slashed
 Foreign Direct Investment: cut back severely
 Economic Growth: constant downward revision of economic
growth forecasts

7. Bubble Theory
• Bubble fueled by "hot money”
• More and more was required as the size of the bubble grew
• Short-term capital flow was expensive and often highly
conditioned for quick profit
• Development money went in a largely uncontrolled manner to
people closest to the political power

8. Preventing Future Crisis
 Universal tax on currency transactions to deter speculation
by the markets
 Improve global regulation, which would involve the IMF, the
World Bank and other regulators
 Creating a process of active and transparent surveillance of
borrowing nations

9. Preventing Future Crisis
 Creating a Code of Best Practice on social policy issues, so
that financial crises, if they do occur, do not result in
disproportionate increases in poverty within developing
countries
 Enhancing regional surveillance: ASEAN
 The provision of fuller economic and financial information to
the public by governments, financial institutions, and
corporations

10. Conclusion
 Globalization is a two-edged sword
 Poor corporate governance & inadequate financial system
supervision build vulnerabilities
 To avoid any further mishaps we need,
 Increased international cooperation in monitoring
 Sharing of information
 Early Warning System

12. Queries

13. THANK YOU