Sociologija 2003 Volume 45, Issue 2, Pages: 167-192
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Global financial interests: The role of IMF in starting and fighting a Asian financial fire in 1997
In our opinion severeness and deepness of Asian crisis could have been largely avoided with relatively moderate adjustments and appropriate policy changes. Explanations of IMF that crisis was provoked by deep macroeconomic distortions and high level of corruption, is, in our opinion, overstated to a great extent. It's evident that there were macroeconomic imbalances, weak financial institutions and prudential regulation, widespread corruption and inadequate legal environment with poor law enforcement. However, magnitude and severeness of financial fire that devastated five Asian economies can't be explained and justified with those imbalances solely. A combination of international investor's panic, policy mistakes by the host governments and poorly designed international programs for overcoming financial troubles provoked panic and deepened the crisis much more that it was both, necessary and inevitable.
Keywords: financial crisis, panic, asymmetric information, moral hazard
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