Definition of Asian financial crisis

The severe economic slowdown and monetary crisis that affected most Asian countries after massive speculative activity forced the devaluation of the Thai baht in July 1997. Many other currencies came under heavy pressure from speculators, forcing interest rates to rise, while asset values fell as money flowed out of Asia. Banking systems came under enormous pressure, with bad debt levels rising sharply. The exact reasons for the crisis are still being debated - one theory is the contradiction between pegged currencies and fundamental asset values, with poor banking controls leading to excessive exposure to corrective forces. The crisis lasted through 1998, but growth remained weak until the Internet boom began to take hold in 1999-2000. The deflationary impact of the Asian financial crisis could still be felt until economies began a sustained recovery in 2003.