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Mitigating the Impact of a Financial Crisis: Some Lessons from Hong Kong During the 1997 Asian Financial Crisis

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  • Ruoxi Zhang
  • Satish Chand

Abstract

The year 1997 was a major milestone for Hong Kong: it experienced the height of the Asian financial crisis; and, it was the very year when the sovereignty was handed back from the UK to China. Hong Kong citizens viewed the handover with mixed feelings under the crisis circumstances: pride in reunification and uncertainty over the future. This study systematically assesses the formation, development and importance of Hong Kong’s monetary system, its integration with mainland China, and the position of the City-State as an international financial centre. We use data collected through fieldwork and guided by the literature to analyse reasons why Hong Kong managed to escape the worst of the impact of the Asian Financial Crisis. Interviews were conducted with informed commentators and senior bureaucrats in Hong Kong, mainland China and Australia to assess- the effectiveness of Hong Kong’s monetary system, the feasibility of the “One country, two systems†proposal, and the integration between Hong Kong and mainland China. Our findings provide support to the proposition that Hong Kong was successful in defending its currency against speculators, stabilising its currency through policy interventions, and in the process strengthening its position as an international financial centre.

Suggested Citation

  • Ruoxi Zhang & Satish Chand, 2013. "Mitigating the Impact of a Financial Crisis: Some Lessons from Hong Kong During the 1997 Asian Financial Crisis," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 2, October.
    • Handle: RePEc:bjz:ajisjr:342
    DOI: 10.5901/ajis.2013.v2n8p285
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    References listed on IDEAS

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    1. Tse, Y. K. & Yip, Paul S. L., 2003. "The impacts of Hong Kong's Currency Board reforms on the interbank market," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2273-2296, December.
    2. Francois Gurtner, 1999. "The stability of the Renminbi in the wake of the Asian financial crisis," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 34(3), pages 135-143, May.
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