The Asian Financial Crisis and the Ordeal of Hong Kong

(Hardback)

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Victim, not instigator of the Asian Financial Crisis, Hong Kong was the only economy that succeeded in defending its fully convertible currency, indeed its entire financial system, against speculators, but the price it paid for success has been deep recession. Jao gives an objective, even-handed account and analysis. Without political or ideological preconsiderations he shows how Hong Kong authorities handled their intervention in the equity market in August 1998. Explaining the conventional wisdom that no fixed exchange rate regime can hold out for long against massive speculation. He goes further to show that Hong Kong contributed not only to the eventual easing of the AFC, but to economic stability throughout Asia as well. Jao opens with a discussion of the nature, causes, and consequences of the AFC. After an overview of Hong Kong's economic and financial fundamentals on the eve of the crisis, he examines the impact it had up close. He examines the massive speculation against the Hong Kong dollar, explaining why speculators were defeated. The AFC's impact on the assets market are also explored. He also analyzes the impact on the financial sector and the real economy. Jao studies and answers two hard questions: why was the economic downturn so severe and why was the territory initially a laggard in economic recovery He then takes up China's role, and presents an objective, balanced view of Hong Kong's money and finance under Chinese sovereignty, followed by a discussion of how China herself coped with the AFC. The book concludes with an in-depth discussion of the lessons the AFC has taught us and the author's reflections on post-AFC issues.

Reviews

"Professor Y. C. Jao is not only an eminent scholar, and the leading expert on Hong Kong's financial system, but he was also well placed in official circles to observe the onset and effect on Hong Kong of the Asian crisis. His book on this subject is authoritative. It is an accurate and compelling account of a complex and difficult subject. Anyone interested either in the course of the Hong Kong economy or of the Asian crisis more widely will need to read it."-Professor Charles Goodhart London School of Economics
"Professor Y. C. Jao's book is a comprehensive, timely, and well-balanced account and assessment of Hong Kong's experience during the East Asian Currency Crisis of 1997-99. The author explains in detail how the Hong Kong dollar's fixed peg to the U.S. dollar has successfully weathered the crisis but he also shows that Hong Kong has had to pay a heavy price for it. He argues, persuasively, that by holding firm its exchange rate and defending the peg successfully, Hong Kong has contributed significanlty to the stabilization of the affected East Asian economies and to the eventual easing of the crisis. This book is a must-read for all economists interested in Hong Kong and East Asia."-Lawrence J. Lau Kwoh-Ting Li Professor of Economic Development Stanford University
.,."the story of the only economy to succeed in defending its fully convertible currency against speculators during the Asian crisis of the late 1990's."-Business Horizons
...the story of the only economy to succeed in defending its fully convertible currency against speculators during the Asian crisis of the late 1990's.-Business Horizons
A great deal has been written about the nature and causes of the recent Asian financial crisis (AFC). However, there are few good case studies on how individual Asian economies had suffered during the crisis. Jao's book clearly fills one of these gaps...the book is well structured and well written. The author also provides a very good introduction to Hong Kong's financial system. It is highly recommended for not only financial market professionals who want to draw lessons of experience from the AFC episode, but also business executives who want to develop a quick understanding of Hong Kong's financial sector.-Migrant Workers in Pacific Asia
This carefully researched book is no doubt a handy reference if one wants to know how the contagion of mismanagement of the financial and monetary affairs in one country spread to other countries...the book must be credited with faithfully documenting the background to and the source of the crisis, and particularly how mainland China was characterized by "an extraordinary mixture of external strengths and domestic weaknesses." The detailed discussion of China's response to the crisis and its ability to weather the storm are all of great interest.-The China Quarterly
..."the story of the only economy to succeed in defending its fully convertible currency against speculators during the Asian crisis of the late 1990's."-Business Horizons
"This carefully researched book is no doubt a handy reference if one wants to know how the contagion of mismanagement of the financial and monetary affairs in one country spread to other countries...the book must be credited with faithfully documenting the background to and the source of the crisis, and particularly how mainland China was characterized by "an extraordinary mixture of external strengths and domestic weaknesses." The detailed discussion of China's response to the crisis and its ability to weather the storm are all of great interest."-The China Quarterly
"A great deal has been written about the nature and causes of the recent Asian financial crisis (AFC). However, there are few good case studies on how individual Asian economies had suffered during the crisis. Jao's book clearly fills one of these gaps...the book is well structured and well written. The author also provides a very good introduction to Hong Kong's financial system. It is highly recommended for not only financial market professionals who want to draw lessons of experience from the AFC episode, but also business executives who want to develop a quick understanding of Hong Kong's financial sector."-Migrant Workers in Pacific Asia

Author Bio

Y.C. Jao is Honorary Professor and Honorary University Fellow in the School of Economics and Finance, University of Hong Kong.