The 1997 financial crisis in asia

A research design is included in the paper. The plan aims at providing the scope of the problem under study, the significance of the study to the governments and even the business sectors and the research questions. Research design also contains the objectives or the goals which need to be achieved by this study. It’s imperative to examine previous studies based on the Asian financial crisis. For that reason, there is an inclusion of the literature review which presents more or less similar or divergent opinions on the topic under study. The results of the crisis were first encountered in Thailand, and it led to the devaluation of the baht when compared to the American dollar. The crisis was characterized by an abnormal increase of the foreign debt to GDP ratio which stood around 167% in the four large Associations of Southeast Asian Nations (ASEAN).

The problem is the devaluation of the currencies which lead to inadequate and unreasonable economic standards of the affected countries. The focus of the study is to address three major issues which are connected to the existence of the 1997 Asian financial crisis. The problems include the reasons for the occurrence of the crisis, measures, and resolutions used by the affected countries during the crisis to reduce its wrath. The consequence of this decision was that the most top performing companies were placed in a better position to control the crisis other than increasing the extent of their investment. The idea was deemed viable although some companies could take advantage created by the mergers to create a monopoly which may result in unreasonable price ranges.

The second consequence brought by the capital allocation and cross-firm equity investment was that the merged firms increased their profitability as the devaluation of the won significantly declined. Therefore, the decisions that South Korean corporate sector took was very vital in improving the value of an economy, increasing the benefits of interested organizations and setting a platform which helps to completely shun the issue of financial crisis in the time of occurrence. Research Methodology The Asian financial crisis occurred in 1997 which means most of the company or organizational managers who were present at the moment could be considered as elderly. The primary sources of information Interviews: - interviews become the main method of acquiring data regarding the Asian 1997 financial crisis. Companies and organizations tend to change their management, but the records always remain intact within the books of such companies.

The interviews would be used to engage the top managers of various organizations and institutions including banks, the corporate sectors, and many others. During the meetings, there will be a close reference to the records of the organizations involved to ascertain the levels of effects they experienced. Interviews will not only be directed to organizations but also the retirees who worked in the companies during the time of crisis. The study will also seek to get information on the effects of the crisis on the general economic and corporate sector in the Middle East. Other areas of concern would include how the companies attempted to cope up with the situations, their strengths, and weaknesses during the crisis and any resolutions put in place to completely curb the situation or adequately deal with in case of its reoccurrence.

Results and Discussions Based on the interviews performed, the responses got are composed to form the results and then discussed accordingly to outline the recommendations of improving the situations. It’s in this section that the primary aim of the study would be addressed. The Asian financial crisis of 2997 is reported to have originated from Thailand with the Thailand baht reducing in its competitive value. Even when the ‘well-connected’ borrowers had management forms which are way below the standards of a particular country, they will borrow loans, use it to temporarily hide their incompetency and meet some policies of the government. This type of loan allocation had the overall effect of loss-making to the lending industries. In a situation where failure and losses were experienced, the lending institutions exempted themselves from bearing the burden presented.

The effect of such a decision that it exposed the little number of incentives which could be used to manage future risks. The reason why there existed a reduced amount of incentives meant for risk management is that the governments diverted most of its funds to curb the failures and losses that affected the financial intermediaries. Many countries always struggle not to deplete their stock because it acts as a driver of the economic worth of a nation. Thailand, Indonesia, and the likes did not take their stock market seriously and had to face the consequences when the fiscal conditions became unbearable. The economic boom and bust that occurred in Asia also made people withdraw a lot of money as they tried to reap the enormous profits which were short-lived.

As a result, banks became subjects to loss-making. The effects of the losses include the fact that many cases of banks becoming bankrupt have been reported and the smooth flow of credit facilities have also been affected. Thailand: - after the booming economy of Thailand had been halted by the financial crisis that struck a good part of Eastern Asia, the Thai government had to look for ways to restore the situation to a level that is favorable to both business operations and the lives of the citizens. The first thing the government did was to increase the tax revenue. The decision was very vital as it helped the government to have a balanced in terms of debt repayment and budget allocation.

With this kind of resolution, the baht substantially increased in strength to a level that could rank 29 against a dollar (Dewandaru, Masih & Masih, 2015). Further improvements will be realized if viable measures are put in place. On the other hand, South Korea had a couple of scandals and corruption cases which played a significant role in exposing her economic weaknesses. The Hanbo Scandal of early 1997 was one of the most recognized scandals. To restore the situation, the International Monetary Fund struck a deal with the Korean government. The provision of the agreement was that the IMF was to give US$58. 4 billion as a bailout package while Korea was to take the reformation measures in return. Printing of money has been restricted, and the countries have long periods between one printing time and the other.

IV. The governments of most Asian countries took a responsibility to impose some restrictions on capital and direct lending that aimed toward or away from particular capacities. The decision may have some questions doubting its creditability in both economic and financial risk management, but with time, the results shall show. Conclusion and Recommendations The 1997 financial crisis of Asia hit very many countries deteriorating their economic values and stability. B. Internal capital markets in business groups: Evidence from the Asian financial crisis. The Journal of Finance, 70(6), 2539-2586. Braun, B. Preparedness, crisis management, and policy change: The euro area at the critical juncture of 2008–2013. Physica A: Statistical Mechanics and its Applications, 419, 241-259. https://doi. org/10. 1016/j. physa. https://doi. org/10. 1016/j. iref. 005 Lim, L.