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Classified in Economy

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One of the fundamentals was FINANCIAL FRAGILITY. Most of these emerging countries had some sort of financial fragility. This represents the 3rd generation model, a currency crisis as the product of exposure and vulnerability to financial risk.


Financial risk was stemming mainly three ways causing various mismatches.
 Firstly, by short term credit causing real appreciation. This lowered the debt burden within the country causing further short term liquidity mismatches.

Secondly would be foreign denominated credit, causing currency mismatches. 

 And lastly, the third would be how liabilities were composed of debt rather than equity, causing capital structure mismatches, which would be even worsen the situation if assets were prove to be high risk. 

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