Financial Crises and Asymmetric Information: Mexican and Asian Crises

Year 2019, , 119 - 148, 29.10.2019

Mehmet Mete Karadağ

https://doi.org/10.33203/mfy.520519

Abstract

The problems arising from asymmetric information in financial
markets prevent the efficient functioning of these markets and prevent
financial markets from transferring funds to the most efficient investment
projects. The existence of asymmetric information, which negatively affects the efficiency and productivity of both financial and non-financial
institutions, is an important factor in economic failures and financial
crises.
In this study, the concept of asymmetric information will be discussed.
Asymmetric information factor in financial crises and its role in
crises will be evaluated. 1994 Mexico and 1997 Asian crises will be
analyzed in terms of asymmetric information.

Keywords

Asymmetric information, adverse selection, moral hazard, financial crises

Finansal Krizler ve Asimetrik Enformasyon: Asya ve Meksika Krizleri

Abstract

Finansal
piyasalarda asimetrik enformasyondan kaynaklanan sorunlar bu piyasaların etkin
bir şekilde işleyişine zarar vermekte; finansal piyasaların en verimli yatırım
projelerine kaynak aktarımını gerçekleştirmesini engellemektedir. Gerek
finansal gerekse finansal olmayan kurumların etkinliğini ve verimliliğini
olumsuz yönde etkileyen asimetrik enformasyonun varlığı, ekonomik
başarısızlıkların ve finansal krizlerin de önemli bir faktörü olarak karşımıza
çıkmaktadır.

Bu çalışmada
asimetrik enformasyon kavramı ele alınarak finansal krizlerdeki asimetrik
enformasyon faktörü ve krizlerdeki rolü değerlendirilmekte, 1994 Meksika ve
1997 Asya krizleri asimetrik enformasyon açısından incelenmektedir. 

Keywords

Asimetrik enformasyon, ters seçim, ahlaki riziko, finansal krizler

References

• Bank for International Settlements (1997). 67th Annual Report. Basle.Bems, R. & Jönsson, K. (2002). Bank Crises in Emerging Markets and the Optimal Government Bailout Policy. SSE/EFI Working Paper Series in Economics and Finance, No. 520. Bordo, M. D. & Murshid, A. P. (2000). Are Financial Crises Becoming Increasingly More Contagious? What Is The Historical Evidence On Contagion? NBER Working Paper Series, No. 7900, Cambridge, MA: National Bureau of Economic Research.Brimmer, A. F. (1998). Bank Lending and the Asian Economic Crisis. North American Journal of Economics & Finance, Vol. 9, Issue 1.Bustelo, P., Garcia, C. & Olivie, I. (1999). Global and Domestic Factors of Financial Crises in Emerging Economies: Lessons from the East Asian Episodes (1997-1999). Instituto Complutense De Estudios Internacionales Universidad Compultense De Madrid, Madrid: Spain, Iceı Working Paper, No. 16. Caprio Jr., G. (1998). Banking on Crises: Expensive Lessons from Recent Financial Crises. World Bank, Washington DC.Caprio Jr., G. & Klingebiel, D. (1996). Bank Insolvency: Bad Luck, Bad Policy, or Bad Banking? Annual World Bank Conference on Development Economics, World Bank, Washington DC. Carstens, A. & Schwartz, M. J. (1998). Capital Flows and the Financial Crisis in Mexico, Journal of Asian Economics, Vol. 9, No. 2.Demirgüç-Kunt, A. & Detragiache, E. (1997). The Determinants of Banking Crises: Evidence from Developed and Developing Countries. Policy Research Working Paper, No. 1828, World Bank, Washington DC. Edwards, S. (1999). On Crisis Prevention: Lessons from Mexico and East Asia. NBER Working Paper Series, No. 7233.Eichengreen, B. & Bordo, M. D. (2002). Crises Now and Then: What Lessons from the Last Era of Financial Globalization. NBER Working Paper Series, No. 8716, Cambridge, MA: National Bureau of Economic Research. Gould, D. M. & Gruben, W. C. (1995). The Roots of Mexico’s Peso Crisis. Federal Reserve Bank of Dallas, Southwest Economy, Issue 1.Gruben, W. C. (1996). Policy Priorities and the Mexican Exchange Rate Crisis. Federal Reserve Bank of Dallas, Economic Review, First Quarter.Gruben, W. C. & Robert McComb, R. (1997). Liberalization, Privatization, And Crash: Mexico’s Banking System in the 1990s. Federal Reserve Bank of Dallas, Economic Review, First Quarter.Hahm, J. H. & Mishkin, F. S. (2000). The Korean Financial Crisis: An Asymmetric Information Perspective. Emerging Markets Review, Vol.1.Heffernan, S. (1996). Modern Banking in Theory and Practice. England: John Wiley & Sons.Hermalin, B. E. & Rose, A. K. (1999). Risks to Lenders and Borrowers in International Capital Markets. NBER Working Paper Series, No. 6886, Cambridge, MA: National Bureau of Economic Research.Hickson, C. R. & Turner, J. D. (1999). Banking Instability in South East Asia: Causes and Cures. European Business Review, Vol. 99, No. 3. Huang, H. & Xu, C. (1999). East Asia: Miracle or Bubble? - Financial Institutions and the Financial Crisis in East Asia. European Economic Review, Vol. 43.IMF Staff. (1998). The Asian Crisis, Causes and Cures. Finance & Development, International Monetary Fund, Washington DC.International Monetary Fund. (1998). World Economic Outlook. International Monetary Fund, Washington DC.Kale, S. & Eken, M. H. (2017) . "Türk Bankacılığında Krizler ve Çıkarılan Dersler". Kırklareli Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi 6 / 5 11-23.Kim, Y. J. & Lee, J. W. (2002). Overinverstment, Collateral Lending, and Economic Crises. Japan and the World Economy, Vol. 14.Krugman, P. (1998). What Happened to Asia. http://web.mit.edu/krugman/www/DISINTER.html.Kwack, S. Y. (1998). Factors Contributing to the Financial Crisis in Korea. Journal of Asian Economics, Vol. 9, No. 4.Lane, T. & Phillips, S. (2001). IMF Financing and Moral Hazard. Finance & Development, Vol. 38, No. 2, International Monetary Fund, Washington DC.Llevellyn, D. T. (2002). An Analysis of the Causes of Recent Banking Crises. The European Journal of Finance, Vol. 8.Ma, Z. & Cheng, L. K. (2003). The Effects of Financial Crises on International Trade. NBER Working Paper Series, No. 10172, Cambridge, MA: National Bureau of Economic Research.Mishkin, F. S. (1990). Anatomy of a Financial Crisis. NBER Working Paper Series, No. 3934, Cambridge, MA: National Bureau of Economic Research.Mishkin, F. S. (1996). Understanding Financial Crises: A Developing Country Perspective. NBER Working Paper Series, No. 500, Cambridge, MA: National Bureau of Economic Research.Mishkin, F. S. (1999). Lessons from the Asian crisis. Journal of International Money and Finance, Vol. 18.Mishkin, F. S. (2000). Prudential Supervision – Why Is It Important and What Are The Issues? NBER Working Paper Series, No. 7926. Cambridge, MA: National Bureau of Economic Research.Mishkin, F. S. (2001a). The Economics of Money, Banking and Financial Markets. Sixth Edition, USA: Addison Wesley.Mishkin, F. S. (2001b). Financial Policies and The Prevention of Financial Crises in Emerging Market Countries. Policy Research Working Paper, No. 2683, World Bank.Mishkin, F. S. & Strahan, P. (1999). What Will Technology Do to Financial Structure? Brookings-Wharton Papers on Financial Services.Moreno, R., Pasadilla, G. & Remolona, E. (1998). Asia’s Financial Crisis: Lessons and Policy Responses. Pacific Basin Working Paper Series, No. PB98-02, Center for Pacific Basin Monetary and Economic Studies, Economic Research Department, Federal Reserve Bank of San Francisco.Puri, T. N., Kuan, C. & Maskooki, K. (2002). An Analysis of Currency Crisis in South Korea. Global Finance Journal, Vol. 13, 2002.Stiglitz, J. E. (1999). Lessons from East Asia. Journal of Policy Modeling, 21 (3).Stiglitz, J. E. & Weiss, A. (1981). Credit Rationing in Markets With Imperfect Information. The American Economic Review, Vol. 71.Stulz, R. M. (1999). Globalization of Equity Markets and the Cost of Capital. NBER Working Paper Series, No. 7021, Cambridge, MA: National Bureau of Economic Research.Yay, T., Yay, G. & Yılmaz, E. (2001). Küreselleşme Sürecinde Finansal Krizler ve Finansal Düzenlemeler. İstanbul: İstanbul Ticaret Odası Yayını, No. 2001-47.Vasquez, I. (1998). Why the IMF Should Not Intervene. Summary of Comments Presented at: "The Asian Crisis And the Reform of the Monetary System" Fundacion Dialogos, Madrid, Spain, http://www.cato.org/speeches/sp-iv22598.html.Wong, K. Y. (2000). Firm Failure and Financial Crisis: The Experience of South Korea. The Journal of the Korean Economy, Vol. 1, No. 1.