Emerging Markets Crisis: An Asset Markets Perspective

Author/Editor:

Arvind Krishnamurthy ; Ricardo J. Caballero

Publication Date:

September 1, 1999

Electronic Access:

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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:

The entire difference between a mild downturn and a devastating crisis is the occurrence of sharp fire sales of domestic assets and possibly foreign exchange and the ensuing collapse in the balance sheets of both the financial and nonfinancial sector. Why and how do such crises materialize? And why doesn’t the private sector take appropriate precautions to avoid the consequences of crises? In this paper we argue that the combination of weak international financial links and underdeveloped domestic financial markets offers a parsimonious account of these and related phenomena present in emerging markets.

Series:

Working Paper No. 1999/129

Subject:

Asset and liability management Asset liquidity Asset prices Banking Collateral Commercial banks Financial institutions Financial statements Prices Public financial management (PFM)

English

Publication Date:

September 1, 1999

ISBN/ISSN:

9781451855098/1018-5941

Stock No:

WPIEA1291999

Pages:

53

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