| Summary: | 碩士 === 南華管理學院 === 亞洲太平洋研究所 === 87 === For the past three decades, East Asia and South East Asia experienced a fast economic growth. To maintain such a high growth rate, many countries in these areas began to open their financial market to foreign investors in the earlier 1990s. However, this was the main factor that directly contributed to the financial crisis beginning in Thailand in July of 1997 and quickly spreading throughout these areas.
This thesis examines the government policy of intervention/non-intervention on the market of foreign exchange, and constructs a theoretical foundation to explain the causes of financial crisis. The explanation constructed by this study is based upon two variables: 1) governmental control over its foreign exchange rate, and 2) governmental control over its foreign capital flow. Based upon these two variables, this study construct an abstract model which successfully explains the degree which East Asian countries suffer from the financial turmoil during the 1997 and 1998 period.
The major argument of this study is that when a government takes action to intervene in the exchange rate but not capital flow, its currency will become the most favorable target for international speculators. However, if a government takes some alternative policies, its currency will only suffers a limited damage. These alternative include1) intervening in the capital flow but not exchange rate 2) non-intervening on both the capital flow and exchange rate, or 3) intervening on both capital flow and exchange rate. Therefore, my study analyzes empirical data for eight countries and discusses the reasons of financial crisis. This thesis finds out that if a country take any one of these alternative policies, they indeed suffer less in this crisis, such as Singapore, Taiwan and China.
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