Title

International Trade Relationships and Contagious Effects of Asian Financial Crisis

Publication Type

Journal Article

Publication Date

2000

Abstract

This paper examines the trade relationship among Pacific Rim Asian economies and the U.S. with an attempt at understanding the fundamental causes for the contagious effects of the Asian financial crisis. East Asian economies trade extensively among themselves and with the U.S. This great dependence on foreign trade and investments has considerably increased the instability of the economies and financial markets in this region. It is found that the impact of the financial crisis on a domestic economy is positively correlated with its trade relationship with foreign economies. The importance of the trade relationship is manifested in the financial markets. Results show that the returns and volatility of a stock market are significantly influenced by the markets of its major trading partners. Also, foreign exchange markets often significantly interact with stock markets, especially following the Asian financial crisis. Furthermore, the Japanese and Hong Kong markets, instead of the U.S. market, had a dominating effect on East Asian financial markets during the period of the financial crisis. [ABSTRACT FROM AUTHOR]

Discipline

Business

Research Areas

Finance

Publication

Review of Pacific Basin Financial Markets and Policies

Volume

3

Issue

3

First Page

367

Last Page

399

ISSN

0219-0915

Identifier

10.1142/S0219091500000212

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