Section 2 presents the assumptions and implications of our model. Section 3 explains our sources and data on exchange rate depreciation and stock market declines during the Asian crisis. Section 4 briefly assesses the ability of standard macroeconomic measures to explain the magnitude of depreciation in 1997-98.
Section 5 shows that measures of corporate governance provide a better explanation for the extent of exchange rate depreciation, and Section 6 assesses both macroeconomic and corporate governance explanations for stock market performance in 1997-98. Section 7 concludes by evaluating the relative strength of corporate governance and macroeconomic explanations for what happened in the Asian crisis.