The Asian crisis and the process of financial contagion

Franklin Allen, Douglas Gale

    Research output: Contribution to journalArticlepeer-review


    Economists have believed for a long time that financial systems are fragile in the sense that small shocks can cause serious disruption. Research has focused on phenomena, such as bank runs, which affect the stability of individual institutions. Only recently has there been interest in the phenomenon of contagion, in which financial distress in one institution or one sector of the financial system spreads to other institutions or sectors. The crises in South-East Asia in 1997 and Russia in 1998 have provoked speculation that financial crises have spread from one country to another. This paper reviews a number of possible hypotheses about the process of financial contagion and relates them to recent events in emerging markets.

    Original languageEnglish (US)
    Pages (from-to)243-249
    Number of pages7
    JournalJournal of Financial Regulation and Compliance
    Issue number3
    StatePublished - 1999

    ASJC Scopus subject areas

    • Strategy and Management


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