The most dramatic event of the second half of 1997 and throughout 1998 was the financial and economic crisis in East Asia. Initially, it was mainly in Thailand and Malaysia, but then spread to Hong Kong, Singapore, Indonesia, South Korea and Japan. It was very unexpected. These countries had until then been developing at an unusually high rate, for which they were nicknamed the “Asian Tigers”. Their model had been described as an example for others to follow. However, 1997 came a kind of hangover. Panic swept through the stock market and the currency exchanges of East Asia. The currency of East Asian countries fell catastrophically: the Thai Baht 45%, Indonesian Rupiah 56%, South Korean Won fell 47% by the end of the year. One after the other local banks went bankrupt, and businesses closed. Tens of thousands of people lost their jobs.
Some observers, pointing to an impressive record of economic growth in East Asia, argued that there was no fundamental reason for the crisis. Moreover, they claimed, an unjustifiable loss of confidence in the international financial investors became a "self-fulfilling prophecy" when panic spread to sell Asian assets. Financial investors spoke to other investors so that they, too, began to sell. However, most economists agree that the fundamental problems of the East Asian economies significantly contributed to the crisis. The most serious issues revolve around the banking systems of the Asian region. During the early 1990s Asian banks received a large stream of foreign investment. The large influx of financial resources and the related current account deficits would not necessarily become a problem if the funds were invested productively. Unfortunately, many local bankers gave loans on the basis of friendship, family relations or political ties the phenomenon that became known as "crony capitalism" As