Financial Vulnerability in Asia

Introduction: Sources of Strengths, Remaining Vulnerabilities and New Policy Challenges for Asia

“…The financial and development costs from the 1997/8 East Asian crisis were massive. Our estimates of forgone output in the four East Asian countries hit hardest by the crisis of 1997/8 -Indonesia, Korea, Malaysia andThailandreach US$917 billion, between 1997-2002, that is US$150 billion annually (Griffith-Jones and Gottschalk 2006). If indirect effects of financial contagion in other countries and impacts via trade effects are added, the effect would be even larger.…”

Prospects and Challenges for Growth and Poverty Reduction in Asia

“…Clearly, there is more than one type of financial crisis. As Griffith- Jones and Gottschalk (2006) argue, it is possible that a new financial crisis might originate in the banking sector. But across Asia as a whole (with the exception of China), banking profitability has been rising, the level of non-performing loans has fallen, and capital adequacy ratios are high -well above the 8% minimum ratio established by the Bank for International Settlements.…”

Growth, Poverty Reduction and Development Assistance in Asia: Options and Prospects

“…7. This section draws on Phillips (2006), and Griffith- Jones and Gottschalk (2006). regimes, appropriate regulatory frameworks, facilities for vocational training, and so on.…”

“…But Asia has considerable strengths on which to draw, including rapid growth and strong export performance, generating high levels of foreign-exchange reserves which provide some 'self-insurance' against future crises. In addition, regional initiatives to provide financial guarantees, such as the Chiang Mai initiative, offer a promising, but as yet small, complement to IMF facilities (Griffith- Jones and Gottschalk, 2006). (ii) Continued improvements in the investment climate: widespread perceptions, especially in South Asia, of adverse conditions for 'doing business' suggest considerable scope for improving the business climate.…”