The Asian Economic Crisis and Malaysia’s Responses: Implications for the Banking Sector

  • Balakrishnan Parasuraman
  • Beatrice Lim
  • Fumitaka Furuoka
  • Catherine Jikunan
  • Lo May Chiun


The economic meltdown began in Thailand in July 1997 and spread to other countries in the region, such as Malaysia, Indonesia, the Philippines, and South Korea. This phenomenon was later called the “contagion effect.” To improve economic foundations, Thailand, Indonesia, and South Korea decided to ask for and received rescue packages from the International Monetary Fund (IMF). However, as the IMF’s conditions were very strict, some experts doubted the validity of the IMF’s policies.


International Monetary Fund Trade Union Banking Sector Capital Account Capital Control 


  1. Baig, T., & Goldfajn, I. (1999, June). Financial market contagion in the Asian crisis. IMF Staff Papers, 46(2), 167–195.Google Scholar
  2. Bird, G., & Rajan, R. (2000).Banks, financial liberalization and financial crises in emerging markets. Accessed 27 July 2008.
  3. Campbell, A., LaBrosse, J. R., Mayes, D. G., & Singh, D. (2009). A new standard for deposit insurance and government guarantees after the crisis. Journal of Financial Regulation and Compliance, 17(3), 210–239.CrossRefGoogle Scholar
  4. Capital controls produce faster economic recovery. Business Times, February 19, 2001.Google Scholar
  5. Cheng, Ming-Yu, & Hossain, S. (2001). Malaysia and the Asian Turmoil. Asian-Pacific Law & Policy Journal, 2, 125–140.Google Scholar
  6. D’Arista, J., & Griffith-Jones, S. (2001). The boom of portfolio flows to ‘emerging market’ and its regulatory implication. In S. Griffith-Jones, M. Montes, & A. Nasution (Eds.), Short-term capital flows and economic crises. New York: Oxford University Press.Google Scholar
  7. Department of Statistics, Malaysia. (2008a). Homepage: Department of Statistics, Malaysia. Accessed 29 Aug 2008.
  8. Department of Statistics, Malaysia. (2008b). Yearbook of statistics Malaysia 2007. Putrajaya: Department of Statistics.Google Scholar
  9. Dobson, W. (2008). Delivering change. Together. In B. Eichengreen & R. Baldwin (Eds.), What G20 leaders must do to stabilize our economy and fix the financial system. London: A publication, Centre for Economic Policy Research.Google Scholar
  10. Formalize KL’s measures, UNCTAD expert suggests. Business Times, September 21, 2000.Google Scholar
  11. Garibaldi, P. (2006). Personnel economics in imperfect labour markets. UK: Oxford Press.Google Scholar
  12. Goldstein, M. (1998). The Asian financial crisis: Causes, cures, and systemic implications. Washington, DC: Institute for International Economics.Google Scholar
  13. Goldstein, M. (2001). The Asian financial crisis: Origins, policy prescriptions and lessons. Journal of African Economics, 10, 72–103.CrossRefGoogle Scholar
  14. Grenville, S. (2000). Capital flows and crises. In G. Noble & J. Ravenhill (Eds.), The Asian financial crisis and the architecture of global finance. Beijing: Cambridge University Press.Google Scholar
  15. Hofer, C. W. (1980). Turnaround strategies. Journal of Business Strategy, 1(1), 19–31.CrossRefGoogle Scholar
  16. In the interest of the vulnerable. Business Times, September 22, 2000.Google Scholar
  17. Jin, N. K. (2000). Coping with the Asian financial crisis: The Singapore experience. Accessed 4 Aug 2008.
  18. Kalderimis, D. (2004). IMF conditionality as investment regulation: A theoretical analysis. Social & Legal Studies, 13(1), 103–131.Google Scholar
  19. Kaminsky, G., & Schmukler, L. (2008). Short-run pain, long-run gain: Financial liberalisation and stock market cycles. Oxford: Oxford University Press.Google Scholar
  20. McConnell, C. R., Stanley, B. L., & Macpherson, D. A. (2009). Contemporary labour economics (9th ed.). Kuala Lumpur: McGraw-Hill.Google Scholar
  21. McGinnes, A. (2008). The human face of the Asian financial crisis in Malaysia and Indonesia. Accessed 16 July 2008.
  22. Miller, J. (1998, November/December). Learning from the Southeast Asian Crisis. Dollars & Sense, Issue no. 220.Google Scholar
  23. Miller, M., & Luangaram, P. (1998) Financial crisis in East Asia: Bank runs, asset bubbles and antidotes (GSGR Working Papers, No.11/98). Coventry: University of Warwick.Google Scholar
  24. Mohamed, Ariff, & Syarisa Yanti, Abu. Bakar. (1999). The Malaysian financial crisis: Economic impact and recovery prospects. The Developing Economies, XXXVII-4, 417–438.Google Scholar
  25. Montes, F. (2001). The southeast Asian currency crisis. New York: Oxford University Press.Google Scholar
  26. Noland, M., Gang, L. L., Robinson, S., & Wang, Z. (1998). Global economic effects of the Asian currency devaluations. Washington, DC: Institute for International Economics.Google Scholar
  27. Norinah, M. A. (2004, August 3–5). Warganegara Asing dan Kemiskinan di Malaysia. Paper presented in 4th International Malaysian Studies Conference, UKM, Bangi.Google Scholar
  28. Parasuraman, B. (2003). Pengurusan Sumber Manusia dan Hubungan Industri: Cabaran dan Isu. (Human Resource Management and Industrial Relations: Challenges Issues). Petaling Jaya: Prentice Hall.Google Scholar
  29. Parasuraman, B. (2004). Malaysian industrial relations: A critical analysis. Petaling Jaya, Malaysia: Prentice Hall.Google Scholar
  30. Parasuraman, B. (2006). Hubungan Industri di Malaysia: Pendekatan dan Amalan (Industrial relations in Malaysia: Practices and approaches). Kuala Lumpur: Dewan Bahasa dan Pustaka.Google Scholar
  31. Parasuraman, B. (2007) An examination of employee participation in the private sector: Malaysian case studies. Unpublished doctor of philosophy, University of Wollongong, Australia.Google Scholar
  32. Pearce, J. A., & Michael, S. C. (1997). Marketing strategies that make entrepreneurial firms recession-resistant. Journal of Business Venturing, 12(4), 301–314.CrossRefGoogle Scholar
  33. Poon, W. C. (2002). Development of Malaysian economy. Kuala Lumpur: Pearson Prentice Hall.Google Scholar
  34. Radelet, S., & Sachs, J. (1998). “The onset of the East Asia financial crisis” mimeo. Cambridge: Harvard Institute for International Development.Google Scholar
  35. Radelet, S., & Sachs, J. (2000). The onset of the East Asia currency crisis. In P. Krugman (ed.), Currency Crises. Chicago: University of Chicago Press. Also available as National Bureau of Economic Research Working Paper.Google Scholar
  36. Rajan, R. (2010). Fault lines: How hidden fractures still threaten the world economy. Princeton: Princeton University Press.Google Scholar
  37. Robson, C. (2002). Real world research (2nd ed.). Oxford: Blackwell.Google Scholar
  38. Satrya, A., & Parasuraman, B. (2009, February). The present scenario of Malaysian and Indonesian industrial relations: Accommodation or conflictual. Asian Profile, 37, 30–45.Google Scholar
  39. Schendel, D., Patton, G. R., & Riggs, J. (1976). Corporate turnaround strategies: A study of profit decline and recovery. Journal of General Management, 3(3), 3–11.Google Scholar
  40. Spaeth, A., & Colmey, J. (1998). He’s the boss. Time South Pacific, Issue 37.Google Scholar
  41. Stiglitz, J. (2002). Globalization and its discontent. London: Penguin.Google Scholar
  42. Suhanah, S. S. A. (2002). Law and labour market regulations in Malaysia: Beyond the new economic policy. In S. Cooney, M. R. Lindsey, & Y. Zhu (Eds.), Law and labour market regulation in East Asia. London: Routledge.Google Scholar
  43. Todd, P., & Peetz, D. (2001). Malaysian industrial relations at century’s end: Vision 2020 or a spectre of the past. International Journal of Human Resource Management, 12(8), 1365–1382.CrossRefGoogle Scholar
  44. Todd, P., Lansbury, R., & Davis, E. M. (2004). Industrial relations in Malaysia: Some proposals for reform. In Proceedings of the IIRA 5th Asian Regional Congress. Seoul, Korea: Korea Labour Institute.Google Scholar
  45. Wang, J. (2005). Financial liberalization and regulation in East Asia lesson from financial crises and the Chinese experience of controlled liberalization. Paper presented at the international symposium: Law, Culture, and Financial Development May 14, 2005, Shanghai, China.Google Scholar
  46. Willett, T. (2010). Policy focus. Some lessons for economists from the financial crisis. Indian Growth and Development Review, 3(2), 186–208.CrossRefGoogle Scholar
  47. Yue, C. S. (1999). The Asian financial crisis: Singapore’s experience and response. In H. Arndt & H. Hill (Eds.), Southeast Asia’s economic crisis: Origins, lessons, and the way forward. Singapore: Institute of Southeast Asian Studies.Google Scholar

Copyright information

© Springer India Pvt. Ltd. 2013

Authors and Affiliations

  • Balakrishnan Parasuraman
    • 1
  • Beatrice Lim
    • 3
  • Fumitaka Furuoka
    • 2
  • Catherine Jikunan
    • 4
  • Lo May Chiun
    • 5
  1. 1.Faculty of Entrepreneurship and BusinessUniversiti Malaysia Kelantan (UMK)Kota BahruMalaysia
  2. 2.University of MalayaKuala LumpurMalaysia
  3. 3.Universiti Malaysia SabahKota KinabaluMalaysia
  4. 4.Malaysian Trade Union CongressKota KinabaluMalaysia
  5. 5.Universiti Malaysia SarawakKota SamarahanMalaysia

Personalised recommendations