Skip to main content
Article thumbnail
Location of Repository

Financial crisis in East Asia: bank runs, asset bubbles and antidotes

By Marcus Miller and Pongsak Luangaram


Was the East Asian crisis just a creditor panic with a mad scramble for liquidity that brought the banking system to its knees and the region's much-vaunted 'economic miracle' to a standstill? Or was the miracle indeed flawed by fundamental problems in asset prices and resource allocation? After a summary of the facts and an outline of various types of financial crisis, we conclude that the truth involves both factors, interacting in a vicious downward spiral. There certainly was panic among the creditors but it was triggered by genuine problems of overinvestment and overvaluation in emerging East Asian economies.\ud \ud Before turning to outline various approaches of crisis prevention and management and a brief account of the future prospects, we discuss how contagion can occur in environments where investors are poorly informed and each looks to the others for guidance. The paper ends with immediate steps that might help resolve the current crises; and with proposed reforms to the international monetary system to prevent a recurrence

Topics: HG
Publisher: University of Warwick. Centre for the Study of Globalisation and Regionalisation
Year: 1998
OAI identifier:

Suggested articles


  1. (1979). A Model of Balance-of-Payment Crises,” doi
  2. (1963). A Monetary History of the United States 1867-1960, doi
  3. (1987). An Analysis of the Implications for Stock and Futures Price Volatility of Program Trading and Dynamic Hedging Strategies,” doi
  4. (1998). Annual Report, Basle,
  5. (1998). Asset Bubbles, Domino Effects, and ‘Lifeboats’: doi
  6. (1983). Bank Runs, Deposit Insurance, and Liquidity,” doi
  7. (1998). Capital flow to Emerging market economies, doi
  8. (1997). Credit constraints, Collateral, and Crisis: Thailand experiences and theoretical modelling,” MSc Dissertation,
  9. (1995). Do we need an international lender of last resort?” mimeo, Frank Graham lecture,
  10. (1995). Incentives: Motivation and the Economics of Information, Cambridge: doi
  11. (1994). Lessons from the East-Asian NICS - A contrarian view,” doi
  12. (1915). Lombard Street: A Description of the Money Market, doi
  13. (1996). Manias, Panics, and Crashes: A History of Financial Crises, Third Edition, doi
  14. (1978). Market Anticipation of Government Policy and the Price of doi
  15. (1997). Market Crashes and Information Avalanches, paper presented at
  16. (1996). Models of Currency Crisis with Self-fulfilling Features,” European Economic Review, doi
  17. (1997). Monsoonal Effects, Spillovers and Contagion,” paper presented at
  18. (1983). Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression,” American Economic Review, doi
  19. (1996). Prevention and Crisis Management after Mexico: What Role for the Offical Sector?” Center for international Economics Working Paper, no.24,
  20. (1997). Regulatory monitoring, Closure costs, and Bank moral hazard behavior,” mimeo,
  21. (1995). Soros on Soros: staying ahead of the curve, doi
  22. (1998). Sovereign Liquidity Crises: The strategic case for a payments standstill,” doi
  23. (1997). The Case for an International Banking Standard,” paper presented at
  24. (1997). The Indonesian Financial System: Its Contribution to Economic Performance, doi
  25. (1998). The Nordic Banking Crises: Pitfalls doi
  26. (1994). The Prudential Regulation of Banks, doi
  27. (1996). The Resolution of Soverign Liquidity Crises, Group of Ten,
  28. (1995). The Tyrancy of Numbers: Confronting
  29. (1987). Trigger Strategies and Price Dynamics in Equity and Foreign Exchange Markets,” NBER Working paper, doi
  30. (1998). What Caused the Asian Currency and Financial Crisis?” paper presented at the CEPR/World Bank Conference on Financial Crises: Contagion and Market Volatility, doi
  31. (1993). Why have a target zone?” doi
  32. (1997). World Economic Outlook: Interim Assessment, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.