Why Was Asia Resilient? Lessons from the Past and for the Future

 
Author/Editor: Phakawa Jeasakul ; Cheng Hoon Lim ; Erik J. Lundbäck
 
Publication Date: February 26, 2014
 
Electronic Access: Free Full text (PDF file size is 1,378KB).
Use the free Adobe Acrobat Reader to view this PDF file

 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Asia proved to be remarkably resilient in the face of the global financial crisis, but why was its output performance stronger than that of other regions? The paper shows that better initial conditions—in the form of lower external and financial vulnerabilities—contributed significantly to Asia’s resilience. Key pre-crisis factors included moderate credit expansion, reliance on deposit funding, enhanced bank asset quality, reduced external financing, and improved current accounts. These improvements reflected the lessons from the Asian financial crisis in the late 1990s, which helped reshape both public policies and private sector behavior. For example, several countries stepped up their use of macroprudential policies, well before they were recognized as an essential component of the financial stability toolkit. They also overhauled financial regulations and strengthened oversight of financial institutions, which helped reduce risk-taking by households and firms before the global financial crisis. Looking ahead, Asia is in the process of adjusting to more volatile external conditions and higher risk premiums. By drawing the right lessons from its pre-crisis experiences, Asia’s economies will be better equipped to address new risks associated with increased cross-border capital flows and greater integration with the rest of the world.
 
Series: Working Paper No. 14/38
Subject(s): Economic growth | Asia | Global Financial Crisis 2008-2009 | Credit expansion | Debt reduction | Macroprudential Policy | Monetary policy | Fiscal policy | Financial systems | Financial crisis

 
English
Publication Date: February 26, 2014
ISBN/ISSN: 9781475540284/1018-5941 Format: Paper
Stock No: WPIEA2014038 Pages: 48
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
Please address any questions about this title to publications@imf.org