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The importance of banks, the quality of credit and the international financial order: reflections on the present crisis in South East Asia

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  • C. DOW

Abstract

This essay considers the present financial crisis in South Asia, and how the international system might be better protected from the recurrence of such crises. It argues that, as with all major events, there were many causes. The essay focusses on the general tendency for bank lending to be unstable, which it argues was an underlying condition fro the crisis. The instability constitutes a problem for central banks, banks and their supervisors, both in borrowing countries, and also in lending countries. The essay suggests a number of ways in which international instability might be mitigated. This instability is an aspect of the problem faced by all countries of avoiding over-speculative conditions in domestic financial markets in order to mitigate fluctuations and preserve stable growth.

Suggested Citation

  • C. Dow, 1998. "The importance of banks, the quality of credit and the international financial order: reflections on the present crisis in South East Asia," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 51(207), pages 371-386.
    • Handle: RePEc:psl:bnlqrr:1998:41
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10602/10486
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    References listed on IDEAS

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    1. Davidson, Paul, 1997. "Are Grains of Sand in the Wheels of International Finance Sufficient to Do the Job When Boulders Are Often Required?," Economic Journal, Royal Economic Society, vol. 107(442), pages 671-686, May.
    2. Manuel Agosin & Ricardo French-Davis, 1997. "Managing capital inflows in Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 24(2 Year 19), pages 297-326, December.
    3. James Tobin, 1978. "A Proposal for International Monetary Reform," Eastern Economic Journal, Eastern Economic Association, vol. 4(3-4), pages 153-159, Jul/Oct.
    4. Miller, Marcus & Luangaram, Pongsak, 1998. "Financial crisis in East Asia: bank runs, asset bubbles and antidotes," National Institute Economic Review, National Institute of Economic and Social Research, vol. 165, pages 66-82, July.
    5. John Smithin, 1994. "Controversies In Monetary Economics," Books, Edward Elgar Publishing, number 412.
    6. Goldberg, Michael D & Frydman, Roman, 1996. "Imperfect Knowledge and Behaviour in the Foreign Exchange Market," Economic Journal, Royal Economic Society, vol. 106(437), pages 869-893, July.
    7. repec:sae:niesru:v:165:y::i:1:p:66-82 is not listed on IDEAS
    8. Wynne Godley, 1996. "Money, Finance and National Income Determination: An Integrated Approach," Economics Working Paper Archive wp_167, Levy Economics Institute.
    9. Ricardo Ffrench-Davis, 1998. "Policy Implications of the Tequila Effect," Challenge, Taylor & Francis Journals, vol. 41(2), pages 15-43, March.
    10. 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.
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    Cited by:

    1. Easterlin, Richard A., 2000. "Locational restructuring and financial crises," Structural Change and Economic Dynamics, Elsevier, vol. 11(1-2), pages 129-138, July.

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    More about this item

    Keywords

    Financial crises; bank lending; financial risk mitigation;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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