Does Asian Financial Crisis Serves as a Precursor for Global Financial Crisis?

Abstract

This study is motivated with the recent happenings in the global economy. A financial crisis hit Asia in 1997-1998 which led to the down fall of some Asian countries financially. With the fall of socialist Soviet government which led to recommendation of new world economic order in a conference in Washington D.C called Washington Consensus. Moreover, among the Washington consensus recommendations and the financial liberalization which there will be no government intervention in the working of invisible hands? In 2008 another financial crisis occurred signifying that lesson where not learnt from the previous financial crisis. However, evidence from this study reveals the similarities in the causes and emergence of two financial crises. Therefore, the study upheld that lessons from Asian financial crisis where not learnt and adequate measures were not taken into cognizance. In this view the paper concludes that there is an urgent need to take precautions against occurrence of another financial crisis. The study offers recommendations to prevent possibilities of another financial crisis and also suggests ways to prevent future financial crisis.