A comparative study of the Asian financial crisis and the U.S. subprime mortgage crisis

As the most far-reaching regional financial crisis at the end of the 20th century, it exposed the systemic vulnerabilities of emerging market economies in the process of financial liberalization. As the trigger of the global financial crisis, the U.S. Subprime Mortgage Crisiss significance lies in revealing the inherent risks in the financial systems of developed countries. This study aims to compare the AFC and the SMC, focusing on their root causes, transmission mechanisms, impacts, and policy responses. It explores how differences in micro-subject behaviors and regional institutions influenced the intensity of crisis transmission and the path of globalization restructuring. The study employs comparative analysis to contrast microdata and institutional texts of the two crises. It combines case studies with econometric models to quantify variable correlations, providing a comprehensive understanding of the crises' mechanisms. The study finds that the AFC was primarily caused by reliance on short-term external debt, severe currency mismatches, and weak financial risk control, leading to currency devaluation and capital flight. In contrast, the SMC was triggered by low interest rates, subprime loan securitization, and rating agency failures, resulting in housing price declines and liquidity crises. Policy responses varied significantly, with the AFC involving IMF assistance and financial system overhauls, while the SMC saw capital injections and regulatory strengthening through legislation.