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Article: Financial institutions and the financial crisis in East Asia

TitleFinancial institutions and the financial crisis in East Asia
Authors
KeywordsAsian financial crisis
Financial crisis
Financial institution
Issue Date1999
PublisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/eer
Citation
European Economic Review, 1999, v. 43 n. 4-6, p. 903-914 How to Cite?
AbstractThis paper investigates institutional reasons for the soft-budget constraint problem; and how the soft-budget constraint problem creates conditions which may result in a financial crisis. As a consequence of soft-budget constraints, bad projects do not stop; bad loans accumulate; and banks and depositors do not receive bad news on time. Poorly informed depositors are then likely to herd to overinvest when there is no bankruptcy ('frenzy'); and they are likely to herd to panic when bankruptcy occurs ('crash'), which may be the result of excessive bad loans that are also a consequence of soft-budget constraints. In contrast, under hard-budget constraints information is disclosed quickly regarding liquidation. Better-informed investors are then less likely to herd wrongly.
Persistent Identifierhttp://hdl.handle.net/10722/138698
ISSN
2015 Impact Factor: 1.095
2015 SCImago Journal Rankings: 1.712
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorHuang, Hen_HK
dc.contributor.authorXu, Cen_HK
dc.date.accessioned2011-09-08T08:13:03Z-
dc.date.available2011-09-08T08:13:03Z-
dc.date.issued1999en_HK
dc.identifier.citationEuropean Economic Review, 1999, v. 43 n. 4-6, p. 903-914en_HK
dc.identifier.issn0014-2921en_HK
dc.identifier.urihttp://hdl.handle.net/10722/138698-
dc.description.abstractThis paper investigates institutional reasons for the soft-budget constraint problem; and how the soft-budget constraint problem creates conditions which may result in a financial crisis. As a consequence of soft-budget constraints, bad projects do not stop; bad loans accumulate; and banks and depositors do not receive bad news on time. Poorly informed depositors are then likely to herd to overinvest when there is no bankruptcy ('frenzy'); and they are likely to herd to panic when bankruptcy occurs ('crash'), which may be the result of excessive bad loans that are also a consequence of soft-budget constraints. In contrast, under hard-budget constraints information is disclosed quickly regarding liquidation. Better-informed investors are then less likely to herd wrongly.en_HK
dc.languageengen_US
dc.publisherElsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/eeren_HK
dc.relation.ispartofEuropean Economic Reviewen_HK
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in European Economic Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 43, ISSUE 4-6, 1999] DOI 10.1016/S0014-2921(98)00103-2-
dc.subjectAsian financial crisisen_HK
dc.subjectFinancial crisisen_HK
dc.subjectFinancial institutionen_HK
dc.titleFinancial institutions and the financial crisis in East Asiaen_HK
dc.typeArticleen_HK
dc.identifier.emailXu, C: cgxu@hku.hken_HK
dc.identifier.authorityXu, C=rp01118en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/S0014-2921(98)00103-2en_HK
dc.identifier.scopuseid_2-s2.0-0032789425en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0032789425&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume43en_HK
dc.identifier.issue4-6en_HK
dc.identifier.spage903en_HK
dc.identifier.epage914en_HK
dc.identifier.isiWOS:000080311700017-
dc.publisher.placeNetherlandsen_HK
dc.identifier.scopusauthoridHuang, H=7405612120en_HK
dc.identifier.scopusauthoridXu, C=23020300700en_HK

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