Have we learnt anything from the Asian crisis? Looking at the crisis from the perspective of India

Rakesh Gupta, Parikshit K. Basu

Research output: Contribution to journalArticlepeer-review

Abstract

The Asian crisis of 1997-98 represents a forceful manifestation of the vulnerability of the economics profession, commercial businesses, international financial organisations and the banks in predicting and averting the economic misery associated with the crisis. This paper attempts to analyse the role of financial structure of an economy in maintaining economic stability and explore the situation where a vulnerable financial structure leads to a crisis. It critically analysed the causes and lessons of the Asian financial crisis of 1997-98 focussing on the crucial trigger factors. The situation in India where the financial structure is on crossroads at present is then analysed in the backdrop of the Asian crisis lessons. The paper concludes that the financial structure in India is weak and unstable at present as it is going through the process of transformation. But this may not necessarily lead to a crisis as no known trigger factors are apparent at the moment. However, the policy makers should attempt to improve the financial structure in India by removing imbalances already created in the process of financial sector reforms. Otherwise, new trigger factors might emerge to lead the vulnerable situation to a crisis.
Original languageEnglish
Pages (from-to)21-30
Number of pages10
JournalDelhi Business Review
Volume8
Issue number1
Publication statusPublished - 2007

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