Can "Moral Hazard" Explain the Asian Crises?
Silva, Luiz A. Pereira da; Yoshitomi, Masaru | December 2001
The authors question the significance of the role of moral hazard in the international financial dimension of the Asian crises. They propose an alternative explanation using a testable model and based on results from a qualitative questionnaire of banks. It is more likely that herd behavior and imprudent competition for market shares by foreign financial institutions explains most of the over-investment and accumulation of short-term liabilities in the East Asian financial bubbles, particularly when the effects of the G-7 business cycles are added. That would suggest international lending in global financial markets requires more policy coordination and data disclosure among institutions and recipient and emission countries, coupled with stronger surveillance of capital flows.
CitationSilva, Luiz A. Pereira da; Yoshitomi, Masaru. 2001. Can "Moral Hazard" Explain the Asian Crises?. © Asian Development Bank Institute. http://hdl.handle.net/11540/4135. License: CC BY 3.0 IGO.
Financial Sector Reform
Economic Development and Finance
Economic and Social Development
Economic and Social DevelopmentShow allCollapse