carney - lessons from the asian financia

cover next page > Cover title: Lessons from the Asian Financial Crisis Routledge Contemporary Asia Series ; 9.9 author: Carney, Richard. publisher: Taylor & Francis Routledge isbn10 | asin: 0415481902 print isbn13: 9780415481908 ebook isbn13: 9780203884775 language: English subject Financial crises Asia. publication date : 2009 lcc: HB3722.L47 2009eb ddc: 332/.042095 subject: Financial crises Asia. cover next page > < previous page page_i next page > Page i Lessons from the Asian Financial Crisis Nearly ten years after the Asian Financial Crisis, financial turmoil has reappeared – this time it is ravaging the world’s wealthiest countries and dragging the global economy along for the ride. It forces one to reflect on the last major financial crisis to afflict the global economy, and to consider whether there are any similarities, and whether there are any lessons from that crisis that we can apply to the current one. In the crisis of 2008, easy money and lax standards on mortgage lending have created a bubble in the real estate markets of the US and Europe. This scenario is all too familiar to those knowledgeable about the Asian Financial Crisis – a real estate bubble enabled companies to inflate the worth of their assets and to borrow more. Banks were all too eager to lend to them. And in 2008, derivatives and excessive leveraging of Wall Street financial institutions have brought the global financial system to the brink of collapse. This too is similar to the situation in 1997, when the near collapse of Long Term Capital Management likewise threatened a global financial meltdown. While the contributions to this volume were all written prior to the onset of the 2008 crisis, they nevertheless offer important insights into the nature of financial crises in the twenty-first century. Written by a distinguished group of individuals from government, the private sector, international organizations, and academia, the chapters provide an overview of developments in the main affected countries during the Asian Financial Crisis, as well as the lessons learned and corrective measures taken at the country, regional, and international levels. Importantly, attention is also paid to the areas where substantial improvements are needed. The current crisis heightens the relevance of these lessons. Lessons from the Asian Financial Crisis will be invaluable to those studying international relations, international finance, international economics and East Asian studies. Richard Carney is Assistant Professor in the S. Rajaratnam School of International Studies at Nanyang Technological University. < previous page page_i next page > < previous page page_ii next page > Page ii Routledge contemporary Asia series 1 Taiwan and Post-Communist Europe Shopping for allies Czeslaw Tubilewicz 2 The Asia–Europe Meeting The theory and practice of interregionalism Alfredo C. Robles, Jr 3 Islamic Legitimacy in a Plural Asia Edited by Anthony Reid and Michael Gilsenan 4 Asian–European Relations Building blocks for global governance? [...]... Lessons from the Asian financial crisis/edited by Richard Carney p cm – (Routledge contemporary Asia series; 9) 1 Financial crises–Asia I Carney, Richard HB3722.L47 2009 332′.042095–dc22 2008027280 ISBN 0-2 0 3-8 847 7-9 Master e-book ISBN ISBN10: 0-4 1 5-4 819 0-2 (hbk) ISBN10: 0-2 0 3-8 847 7-9 (ebk) ISBN13: 97 8-0 -4 1 5-4 819 0-8 (hbk) ISBN13: 97 8-0 -2 0 3-8 847 7-5 (ebk) < previouspage_iv nex page page > < previouspage_v... RICHARD W CARNEY PART I Overview vii x xii 1 13 2 From miracle to 15 misadventure: the political economy of the 1997–98 crises JOHN RAVENHILL 3 Causes of the 1997–1998 East 33 Asian crises and obstacles to implementing lessons JOMO KWAME SUNDARAM PART II Lessons learned and not learned 65 4 Indonesian financial crisis ten 67 years after: an insider’s view J SOEDRADJAD DJIWANDONO 5 The Asian financial... accountability PETER GOUREVITCH PART III Preparations for future problems 153 9 The Asian financial crisis 155 revisited: lessons, responses and new challenges MASAHIRO KAWAI AND PRADUMNA B RANA 10 Ten years after the Asian 198 crisis: Is the IMF ready for “next time”? STEPHEN GRENVILLE 11 The post-Asia-crisis system 222 of global financial regulation and why developing countries should be worried about... mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Lessons from the Asian financial crisis/edited... The Asian financial crisis ten 78 years later: what lessons have we learned? ANWAR IBRAHIM < previouspage_v next page page > < previouspage_vi nex page page > Page vi 6 Ten years from the financial 84 crisis: managing the challenges posed by capital flows KHOR HOE EE AND KIT WEI ZHENG 7 The Asian financial crisis ten 112 years later – lessons learnt: the private sector perspective MANU BHASKARAN 8 Politics,... Jack F Williams and Ch’ang-yi David Chang 6 Taiwan’s Relations with Mainland China A tail wagging two dogs Su Chi 7 The Politics of Civic Space in Asia Building urban communities Edited by Amrita Daniere and Mike Douglass 8 Trade and Contemporary Society Along the Silk Road An ethno-history of Ladakh Jacqueline Fewkes 9 Lessons from the Asian Financial Crisis Edited by Richard Carney < previouspage_ii... into 101 ASEAN-4, Korea and Taiwan < previouspage_vii nex page page < previouspage_viii ne page page Page viii 6.24 Bank and other investment inflows into ASEAN-4, Korea and Taiwan 6.25 MSCI Asia-ex Japan 90-day volatility 6.26 M2 growth – Southeast Asia 6.27 M2 growth – Northeast Asia 6.28 Stock prices – Southeast Asia 6.29 Stock prices – Northeast Asia 6.30 Residential property prices – Southeast Asia... page > Page iii Lessons from the Asian Financial Crisis Edited by Richard Carney LONDON AND NEW YORK < previouspage_iii nex page page > < previouspage_iv nex page page > Page iv First published 2009 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis... Assessment of changes in 124 IFA 7.A1 Key changes in crisis-hit 128– countries 8.1 Shareholder diffusion and Minority Shareholder Protections 8.2 Change in “corporate governance index” 1995– 2003 9.1 Summary of policy lessons from the Asian financial crisis 9.2 Selected financial indicators 9.3 Regional forums for policy dialogues 9.4 Progress on BSAs under the Chiang Mai Initiative 9.5 FTAs in Asia, 2000 and... in 21 East Asian emerging markets 10.4 Exchange rate and reserves in 21 Korea, 1998–2005 Tables 2.1 Sources of vulnerability in the crisis economies 3.1 East Asian four: macroeconomic indicators, 1990–1999 3.2 Lending by banks reporting to BIS by sector 3.3 Exposure of banks reporting to BIS and non-BIS borrowers 3.4 Maturity distribution of lending by banks reporting to the BIS to the East Asian four, . 332′.042095–dc22 2008027280 ISBN 0-2 0 3-8 847 7-9 Master e-book ISBN ISBN10: 0-4 1 5-4 819 0-2 (hbk) ISBN10: 0-2 0 3-8 847 7-9 (ebk) ISBN13: 97 8-0 -4 1 5-4 819 0-8 (hbk) ISBN13: 97 8-0 -2 0 3-8 847 7-5 (ebk) < previous page page_iv. for the ride. It forces one to reflect on the last major financial crisis to afflict the global economy, and to consider whether there are any similarities, and whether there are any lessons from that. levels. Importantly, attention is also paid to the areas where substantial improvements are needed. The current crisis heightens the relevance of these lessons. Lessons from the Asian Financial Crisis will be invaluable