Southeast Asias banks and businesses were very optimistic that the rapid economic growth would continue. The result was huge amounts of money being borrowed by Southeast Asias investors. They then invested in domestic ventures, such as real estate. When those investments did not make a profit, companies simply borrowed more money or extended their loans to cover outstanding debt. Often times, banks were pressured to make loans at the request of the government. The government felt if this cycle of borrowing and reinvesting in domestic industries continued, so would the economic growth.By 1997, many Asian businesses had debts valued at between three and six times the total amount of cash invested in their companies. These massive debts quickly led to bankruptcy when currencies fell and no one was willing to extend any more loans in Asian countries.Corruption was also rampant in this region, causing further problems in Southeast Asia. In June 1997, 11 prominent businessmen, bankers and politicians were convicted of embezzling funds and pressuring banks to make illegal loans to a South Korean corporation. The firm's executives had bribed politicians for special government assistance to keep their firm, which had large amounts of debt, afloat. It was said that this type of scandal was typical of the corrupt business practices in many Asian countries. Pressure for ChangeMany argue that by manipulating the financial sector and coddling business conglomerates with special assistance, Southeast Asian governments promoted risky and foolish business practices that have imperiled the economy. They blame the governments carelessness for the Asian Financial Crisis. They say that the extreme growth in the 1980s and 1990s was due to a large accumulation of bad debt and excessive government intervention in their economies. This is demonstrated in Richard Hornik, European business editor for Time magazine, words: The financial crisis facing Asia today i...
