Transcript The 1997 Asian Financial Crisis (AFC)

The 1997 Asian Financial
Crisis (AFC)
Arthur James
Haruto Noguchi
Wayne Saward
Background of the AFC
• When?  1997
• Where?  Thailand, Malaysia, South
Korea, Hong Kong, Indonesia
Primary Causes of AFC
•
Swift Pull-out of Foreign Investments
•
Underdeveloped Asian Financial Markets
Primary Consequences
• Devaluation of Asian Currencies
• Collapse of Asian Economies
Impact on Thailand
•
•
•
•
•
•
•
9% Economic Growth
Devaluation of the Baht
Baht Buy Back
Fixed  Floating Interest Rates
75% Decline in Stock Market
Company Bankruptcies
Unemployment
Impact on Hong Kong
• Monetary Authority’s Effort
• Overnight Rate Increase (8%23%)
• Weakened Impact of Financial Crisis
Impact on Malaysia
• Devaluation of the Ringgit
• Fixed  Floating Rate System
• Economic Depression in ALL Sectors
Impact on Indonesia
• Devaluation of the Rupiah after Thailand
• IMF to the Rescue
• Severe Inflation
• Suharto Losing Power
Proposition: AFC caused by
INTERNAL Factors.
• Asian Economic Growth Reliant Solely on
Foreign Investments
• Weak Domestic Banking Systems
• Un-tradable Investments
• No Long Term Plan for Economic Growth
Proposition: AFC caused by
INTERNATIONAL Factors
• Unreliable Risk Analysis
• IMF and World Bank
– Regulation & Restrictions
Proposition: Globalization should
be reduced to prevent future crisis
• Globalization is Necessary for Expansion
• International Cooperation
• IMF