n essence, a matter of trying to keep things covered up until the last possible moment. Financial Sector-This brings us to the financial sector scope of the problem. Although the corporations were the ones asking for the loans (facilitated by certain policies), it was the banking institutions that were most at fault. There was a serious lack of management on their part. It seems that all precaution was thrown to the wind in an attempt to see more growth. The banks and money institutions were borrowing and loaning money excessively. Again, the risk factor of loans was not even an issue. The main factors behind the banking debacle were: lax supervision on loans, weak regulation, lack of incentive-deposit insurance plans (incentives to have people save and deposit their money so that the banks will have a reserve in case a loan goes bad), lack of expertise in the regulatory institutions, and outright corruptive lending procedures. The consequences of these problems were only magnified when the financial markets in the region deregulated and became more liberal. This made it only easier to procure money from the exterior. Due to the large amounts of borrowed capital from the exterior, exchange rate policies were adopted to stabilize (and eventually peg) the exchange rates of most Asian currencies in comparison to the dollar. This, as was thought, would lower the risk-premium on dollar-denominated debt. By lowering the risk premium, the countries would look more attractive to international investors. The only problem with a fixed exchange rate is that it opened a pandora's box of potential problems--- most of these rooted in the international sector scope. International Sector-As hard as it may seem to believe, it can be said that many of the foreign banks are just as much at fault as the Asian banks (well, in part) for the financial crisis. Why? Well, we see that the Asian banks were drawing a very high number of foreign loans. However, the...
