Was East Asia Illiquid Or Insolvent? With Special Reference to South Korea

Dean, James W.
September 1999
Multinational Business Review (St. Louis University);Fall99, Vol. 7 Issue 2, p60
Academic Journal
This paper argues that since mid-1997, East Asian crisis countries have suffered from a withdrawal of international capital flows well beyond any fundamental weakness in their economies. This has resulted in good part from "reverse free rider" behavior by foreign lenders. Hence East Asia has been "illiquid" but not "insolvent". The paper argues further that IMF "bailout" lending, although not always the conditions that have gone along with it, has been unjustly maligned. This argument is illustrated with reference to South Korea.


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