Financial crises are global phenomena. They seem to take place every now and then. However, countries can take advantage of their historical lessons and minimize the potential for future crises. Against this perspective, this book presents a critical review of major financial crises and draws important lessons.
The book begins with a review of the Mexican financial crisis of 1994, scrutinizing both its causes and subsequent impacts on Mexico’s economy. It then examines the international bailout that was initiated amidst strong criticisms, after which it discusses the policy measures introduced to lessen the impact of the crisis. The chapter concludes by deriving key lessons from this financial meltdown.
The East Asian crisis of 1997 was largely unpredicted, while its gravity was dismissed by policymakers. Yet the crisis had severe consequences, not only on the economies of East Asia, but also on the global financial markets. The overall economic situation in the crisis-affected countries, prior to the onset of the crisis, is therefore examined within this context. This is followed by considering the case of Thailand, as it was here that the crisis originated. After pointing out the major factors responsible for this financial debacle, the IMF-supported programs for the crisis-hit countries are critically assessed. The valuable lessons extracted from the crisis are then highlighted.
In comparison to other previous crises, the global financial crisis (GFC) of 2007 was quite different in its manifestation. This crisis seemed unusual in its complexity and the multiplicity of contagion channels. In this light, a detailed discussion of the GFC is undertaken by firstly explaining the origin of the crisis. The similarities and differences of this crisis vis-à-vis some previous crises are also elucidated. Next, the impact of the GFC on the economies of developed, developing and least-developed countries is examined together with the measures initiated by the governments to minimize the adverse impact of the crisis. The lessons derived from the GFC are also analyzed.
A specific chapter is devoted to a broader review of the origin, impacts, and lessons from other crises. These include the Stock Market Crash of 1929 and the Great Depression, the international debt crisis of the 1980s, Russia’s financial crisis of 1998, Turkey’s financial crisis of 2001, Argentina’s financial crisis of 2001, and the European debt crisis of 2010.
The last chapter provides a summary of the wider lessons drawn from these crises.
Bhubanesh Pant is a former Executive Director of Nepal Rastra Bank (Central Bank of Nepal), where he was principally involved in the Research Department. He also served as a consultant to various research institutions, and led studies on topics related to international trade and the financial sector.
Dr. Pant has contributed papers to numerous national and international journals. He is the author of (a) Trade and Development: Nepal’s Experiences, (b) Obstacles to Growth: Some Experiences of Least Developed Countries, (c) Financial Crises, Recovery and Reforms, and the co-author of (d) North-South Dialogue: Issues and Options. His areas of interest include international trade, remittances, foreign direct investment, financial crises, and financial inclusion.
