East Asian Financial Cycles: Asian vs. Global Financial Crises

Akira Kohsaka and Jun-ichi Shinkai
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Jun-ichi Shinkai: Specially Appointed Researcher, Osaka School of International Public Policy, Osaka University

No 14E008, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: We examine the role of financial shocks in business cycles in general and in financial crises in particular in East Asia (Indonesia, Korea, Malaysia and Thailand) since the 1990s. Estimating a Financial Conditions Index, we found that financial shocks explain most of business downturns in all the economies in the Asian Financial Crisis (AFC) in 1997-98, but that the effects of financial shocks are diverse across economies in the Global Financial Crisis (GFC) in 2008-09. In the GFC, the financial shocks played a relatively minor role in Indonesia, Malaysia and Thailand, while it played a similarly dominant role in Korea. Among individual financial channels, risk factors related to volatile external financial inflows were most significant in all the economies in the AFC and in Korea in the GFC.

Keywords: Business cycles; Financial Conditions Index (FCI); Asian Financial Crisis; Global Financial Crisis; East Asia (search for similar items in EconPapers)
JEL-codes: E32 E42 E44 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2014-11
New Economics Papers: this item is included in nep-fmk, nep-mac and nep-sea
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