Question

What factors led to an economic crisis in 1997?

Answer 1

FunM damental imbalances triggered the currency and financial crisis in 1997, even if, once the crisis started, market overreaction and herdingcaused the plunge of exchange rates, asset prices and economic activity to be more severe than warranted by the initial weak economic conditions

Answer 2

Following are the factors that led to an economic crisis in 1997:

• Higher interest rates on deposits in the United States

• Foreign indebtedness of the East Asian countries

• Fall in the value of Asian currencies against the US dollar.

Step-by-step explanation:

• The East Asian financial crisis of 1997 was majorly a setback of the economic reformation that conventionally took place in US

• The increase in the interest rates in US resulted in the diversion of global investments towards itself paving way for an 'economic crisis' in East Asia.