Publication

This paper describes how the banking crises that swept through East Asia in 1997– 1998 set off dramatic recessions in the affected countries and imposed heavy costs on the domestic taxpayers. The author explains how the fear of further crises prompted searches for possible causes and early warning signs. The paper states that liberalization was identified as one of the precursors that helped trigger financial instability, either because of an insufficient regulation of the financial sector or because of an erosion of previously granted monopolies of existing banks.