Corporate Responses to the Asian Financial Crisis

Abstract

The Asian financial crisis has escalated into the biggest threat to global prosperity since the oil crisis of the 1970s. The region’s once booming economies are still fragile, liquidity problems are crippling regional trade, and losses from Asian investments are eroding profits for many Japanese companies. Similarly, among Western companies, quite a few US companies are reporting less than expected earnings because of their large investments in Asia. Others fear that the Asian crisis would wash ashore to the seemingly unrelated regions of the world, including the USA and Europe. For example, the unsettling ups and downs of the Dow Jones Industrial Average reflect the precarious nature of US investments in Asia. Economists blamed Asia for nipping the world’s economic growth by one percentage point in 1998–99.