Asia's Financial Crisis and the Role of Real Estate

Asia's Financial Crisis and the Role of Real Estate

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What role has real estate played in causing and exacerbating the Asian financial crisis? In the decade prior to the crisis every affected country -- Indonesia, Hong Kong, Japan, Malaysia, Singapore, South Korea, and Thailand -- saw its own real estate market absorb the most significant portion of all net capital inflows. This led to a dramatic inflationary spiral in property prices throuhgout the region. However, it also locked up a tremendous amount of financial liquidity -- as much as 40% of all short-term capital in Indonesia, Malaysia, and Thailand -- which, as the authors show, served as a catalyst for the crisis and later worsened its effects on both the regional and global economies. This book by a distinguished academic and a professional economist from the World Bank clearly demonstrates the signifcant role played by the real estate sector in inducing the Asian crisis; the linkage of the real estate sector to the general economy; the causes of real estate booms and subsequent busts; and the economic costs of real estate price volatility. The book also includes methods for moderating such volatility in the future.Figure 13.3 Thailand: Finance Companiesa#39; Loans to Real Estate and Construction (12-month growth rates by quarter and share of total loan ... supervisory reports, various issues. tices are thoroughly described in the operating manuals used by leading supervisory institutions such as the ... The checklist of recurring problems is as follows (Renaud 1997; Renaud et al. ... Close intercompany links and related- company transactions in the real estate sector weaken financial institutionsanbsp;...

Title:Asia's Financial Crisis and the Role of Real Estate
Author:Kōichi Mera, Bertrand Renaud
Publisher:M.E. Sharpe - 2000-01-01


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