Case | HBS Case Collection | October 2008

Financial Crisis in Asia: 1997-1998 (Abridged)

by Huw R. Pill, Rafael M. Di Tella and Jonathan Schlefer

Abstract

What caused the 1997-98 Asia Crisis: Asian nations' poor economic management, international financial contagion, close "crony" relations between local politicians and capitalists? This case examines how the crisis erupted in Thailand and spread in a chain of events that no one-neither Asian financial authorities nor Western economists-had foreseen. The crisis raises questions about how competently financial institutions, such as mutual funds, managed their global capital investments. It raises questions about how effective the International Monetary Fund's package of reforms was-and to what extent the IMF acted in the interest of Wall Street rather than developing nations. And the crisis raises questions about the development policies of Asian nations: Did too-close "crony" relations between politicians and owners of major banks or firms pave the way for crisis?

Keywords: Developing Countries and Economies; Financial Crisis; Ethics; Financial Institutions; Financial Management; Governing Rules, Regulations, and Reforms; Business and Government Relations; Asia;

Citation:

Pill, Huw R., Rafael M. Di Tella, and Jonathan Schlefer. "Financial Crisis in Asia: 1997-1998 (Abridged)." Harvard Business School Case 709-004, October 2008.