Asian Financial Crisis 1997
The 1997–98 Asian crisis was a sequence of peg breaks, bank runs, and sudden stops starting in Thailand — short-dollar corporate debt plus weak bank regulation meeting a reversal of carry.
Definition
Thai finance companies and corporates funded long local assets with short dollars under an implicit peg. The July 1997 baht float was the first domino; Indonesia, Korea, and others followed. IMF programs mixed liquidity with controversial structural conditions. Hong Kong’s peg held after a fight.
Why it matters
It rewired EM risk forever: reserve accumulation, less short-dollar bank debt, more local-currency bonds, and a permanent fear of the IMF stigma.
Case
Korea’s December 1997 rollover, Indonesia’s political collapse, and Malaysia’s capital controls. The 1998 Russia/LTCM wave was the next room, not the same fire.
How to read it
Look at short FX bank liabilities versus reserves, the real-estate cycle, and whether the peg is a political identity. Twin crises (bank + FX) are the Kaminsky–Reinhart pattern.
Key papers
Landmark references with real publisher or arXiv links — not token-overlap noise.
- The Twin Crises: The Causes of Banking and Balance-of-Payments ProblemsKaminsky, Reinhart · 1999 · American Economic ReviewBanking + FX as a joint object.