Bad lending leading to the East Asian crisis in 1990s - Essay Example
347). The basic diagnosis attributed the crisis to the financial chaos caused by the financial systems riddled by the insider dealings, weak corporate governance, and corruption that caused inefficient spending investment. This weakened stability in the banking system. The economies in East Asia were successful for generations, and the crisis in1997 was unanticipated despite Yung Chul Park (1996) warning against impending crisis. Many foreign investors invested a lot of funds even at the onset of the crisis (Choe and Chinmay 2007, p. 232-255). This paper investigates on the bad lending that led to the financial crisis in East Asia in 1990s. This is because of the success of economies in East Asia that led to massive financial inflows in years leading to crisis, with few warning signs. Background to financial crisis Central to the full understanding of the cause of East Asian crisis is multifaceted evidence on the structure of the incentives used by financial and corporate sectors, which operated in the area.
