Question

Which of the following contributed to the Asian financial crisis in 1997?

1) Currency devaluation
2) Excessive borrowing
3) Weak financial regulations
4) All of the above

Answer 1

The Asian financial crisis in 1997 was caused by currency devaluation, excessive borrowing, and weak financial regulations.

Step-by-step explanation:

The Asian financial crisis in 1997 was caused by all of the above - currency devaluation, excessive borrowing, and weak financial regulations.

Firstly, countries like Thailand, Korea, Malaysia, and Indonesia experienced a sharp depreciation of their currencies. Secondly, these countries had been borrowing heavily, which contributed to a surge in bank lending. Lastly, weak financial regulations allowed for poor screening of borrowers and a high percentage of bad loans.