Abstract
M.Com. (Business Management)
Until mid-1997, South East Asia was regarded as among the most economically
successful regions of all time. Growth forecasts were very positive and current
account deficits were equally satisfying, Then, on July 2, 1997, the Thai Baht
suffered severe devaluation and subsequently sparked the "East Asian crisis"
(Zaaiman & King, 3). The crisis started in Thailand and soon spread to Indonesia,
the Philippines, South Korea and eventually Malaysia.
Everyone was still measuring the spill-over effects that the Asian crisis had on
other emerging markets when another piece of alarming news made the headlines.
Russia's. Rouble suffered devaluation during October 1998 - slightly more than a
year after the East Asian crisis first emerged. Suddenly emerging market
economies became a major cause of concern and banks, like many other
industries, within emerging markets were viewed with equal pessimism.
The above two crises were unfortunately not the end of what was perceived to be
a world-wide emerging market crisis. During December 1998, Brazil's Minister
of Finance and the country's Central Banker both resigned within a short period,
again sending shock waves throughout emerging markets. This situation was
reminiscent of the' Mexican Peso devaluation and the crisis that followed
accordingly in emerging markets in the early 1990's.