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Financial Links and Contagion in the 1997 Asian Currency Crisis: An Empirical Examination
Book chapter

Financial Links and Contagion in the 1997 Asian Currency Crisis: An Empirical Examination

Asia Pacific Financial Markets in Comparative Perspective: Issues and Implications for the 21st Century, pp 101-114
23 Dec 2005

Abstract

This paper provides evidence of financial linkages across countries as a channel of contagion of currency crises in the case of the 1997 Asian crisis using high-frequency data, focusing on the hardest hit countries in the region: Thailand, Indonesia, Malaysia, and Korea. Stock markets in the region were found to play an important role in transmitting initial and local shocks beyond its country of origin to other emerging economies during the 1997 crisis. Stock market linkages seem to have contributed importantly to the quick and wide-scale contagion of the ensuing exchange rate crisis across countries in the 1997 Asian crisis episode.

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