The collapse of the Thai baht in July 1997 was followed by an unprecedented financial crisis in East Asia, from which these economies are still struggling to recover. A great deal of effort has been devoted to trying to understand its causes.
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In the East Asian case, the severity and importance of the crisis in the financial sector and other structural weaknesses in the countries concerned mean that necessary corrective measures are likely to take longer to implement than in crises that can be resolved mainly by macroeconomic adjustment.
To sum up the East Asian Financial Crisis of had its roots in the lack of a proper criterion for deciding an investment project is worthwhile. Instead the decision to go ahead with a project was based upon whether financing could be obtained.
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