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The 1997-98 Financial Crisis In Malaysia: Causes, Response, And Results

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  • HASAN, ZUBAIR

    (International Islamic University)

Abstract

This paper argues that the 1997-98 financial crisis did not hit Malaysia because the economic fundamentals of the country were weak. It was the result of massive unpredictable flight of short-term portfolio investment from the region including Malaysia. The paper assembles evidence, and employs econometric tools to support the contention. It maintains that the choice of the country to impose selective capital controls for remedying the situation was efficacious, and proved fairly rewarding. It also makes a few observations from an Islamic angle that may help forestall the occurrence of such crises in future.

Suggested Citation

  • Hasan, Zubair, 2002. "The 1997-98 Financial Crisis In Malaysia: Causes, Response, And Results," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 9, pages 1-16.
    • Handle: RePEc:ris:isecst:0078
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    References listed on IDEAS

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    1. Eduardo Borensztein & R. Gaston Gelos, 2003. "A Panic-Prone Pack? The Behavior of Emerging Market Mutual Funds," IMF Staff Papers, Palgrave Macmillan, vol. 50(1), pages 1-3.
    2. Rudi Dornbusch, 2001. "Malaysia: Was it Different?," NBER Working Papers 8325, National Bureau of Economic Research, Inc.
    3. Granger, Clive W. J. & Huangb, Bwo-Nung & Yang, Chin-Wei, 2000. "A bivariate causality between stock prices and exchange rates: evidence from recent Asianflu," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 337-354.
    4. Kearney, Colm, 1999. "The Asian Financial Crisis," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 1999(1-Februar), pages 29-55.
    5. Hasan, Zubair, 1999. "Recent financial crisis in Malaysia: response, results, challenges," MPRA Paper 21844, University Library of Munich, Germany, revised 2000.
    6. Dilip Das, 1999. "Private capital flows and speculative runs in emerging market economies," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 4(3), pages 413-430.
    7. Steven Radelet & Jeffrey D. Sachs, 1998. "The East Asian Financial Crisis: Diagnosis, Remedies, Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 1-90.
    8. Ghosh, Asim & Saidi, Reza & Johnson, Keith H, 1999. "Who Moves the Asia-Pacific Stock Markets--US or Japan? Empirical Evidence Based on the Theory of Cointegration," The Financial Review, Eastern Finance Association, vol. 34(1), pages 159-170, February.
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    Cited by:

    1. Hasan, Zubair, 2018. "Deficit finance and developing economies:Implications and results," MPRA Paper 89818, University Library of Munich, Germany.
    2. Chen, David Y. & Li, Tongzhe, 2014. "Financial crises, Asian stock indices, and current accounts: An Asian-U.S. comparative study," Journal of Asian Economics, Elsevier, vol. 34(C), pages 66-78.
    3. Hasan, Zubair, 2018. "Deficit financing in developing countries: Application and consequences," MPRA Paper 89654, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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