International Financial Contagion: An Overview of the Issues and the Book

  • Stijn Claessens
  • Kristin Forbes

Abstract

Before 1997, the term “contagion” usually referred to the spread of a medical disease. A Lexis-Nexis search for contagion before this year finds hundreds of examples in major newspapers, almost none of which refer to turmoil in international financial markets.1 This changed in July of 1997. A currency crisis in Thailand quickly spread throughout East Asia and then on to Russia and Brazil. Even developed markets in North America and Europe were affected, as the relative prices of financial instruments shifted and caused the collapse of Long-Term Capital Management (LTCM), a large U.S. hedge fund. These global repercussions from what began in the relatively small Thai economy have sparked the widespread use of a new meaning for the term contagion. A Lexis-Nexis search of major newspapers since mid-1997 finds that almost all articles using the term contagion referred to the spread of financial market turmoil across countries.

Keywords

Mutual Fund Hedge Fund Detailed Case Study Asian Crisis Debt Maturity 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Stijn Claessens
    • 1
  • Kristin Forbes
    • 2
  1. 1.World BankUSA
  2. 2.Massachusetts Institute of Technology and NBERUSA

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