Question

What was the basic cause of the Asian crisis? What was the basic cause of the Russian crisis?

Answer 1

The basic cause of the Asian crisis were a number of asset bubbling. In asset bubbling the prices of property becomes over inflated in a short period of time without any demand for it. The main reason for asset bubble is lower interest rates. The increase in the export leads to increase in Foreign Direct investment which leads to increase in real estate values, increase in spending which ultimately leads to increase in bank financing.

The basic cause of russian crisis was fall in value of ruble and increase in interest rates which led to investors losing confidence on russian economy.