Part 4/8:
Investor psychology played a significant role in the unfolding crisis. With mounting revelations of financial instability in one nation, investors began to reassess the viability of others, triggering a domino effect across the region. As investor confidence waned, capital was withdrawn at a breakneck pace, culminating in economic implosions across the affected nations.
Viewed through this lens, the Asian Financial Crisis can largely be seen as a consequence of private sector debt overreach coupled with an explosive trigger precipitated by investor panic and a chain reaction of information revelation that amplified the existing financial woes.