The 1997 Asian financial crisis represents a watershed in East Asia’s economic history. The end of the East Asian economic miracle has ushered in a long and painful period of economic reform and restructuring.
It taught the crisis-hit countries a lesson that structural weaknesses of the financial system exacerbate a crisis when it occurs, though they may not necessarily trigger it. Indeed the crises left little doubt that the cumulative effect of financial imbalances could cause
serious disruptions to the economy and interfere with real sector development.
As part of their efforts to build resilience to external shocks, most of the East Asian countries including the crisis-hit ones have voluntarily or under external pressure, increased the pace and scope of domestic financial reform to liberalise and open their financial markets and also to improve soundness, corporate governance and risk management at financial institutions.