The Asian Financial Crisis was the sudden, massive withdraw of funds from many Asian economies and the resulting economic chaos. The Crisis began summer 1997 for many countries. This section is a very brief look at the Crisis. Asset prices bid up Investment opportunities were not expanding as rapidly as capital inflows. Real estate and stock prices were bid up.
Implicit government guarantees A close relationship between firms, banks, and government existed.
Foreign investors assumed the governments would not allow banks to fail. Borrowers take excessive risks Bank managers had every incentive to take high risks. If they got lucky on an investment, they won big. Instead, if the deal didn't work out, they did not lose their own money. Thus, Moral Hazard problems existed.