The East Asian financial crisis, which began in mid-1997, has been characterized by a sudden reversal of capital flows, leading to financial panic and deep economic contractions in the affected countries. The crisis has been attributed to both macroeconomic shocks and weaknesses in the financial systems of East Asian countries. These weaknesses included growing short-term foreign debt, rapid bank credit expansion, and inadequate regulation and supervision. The IMF's response, focused on overhauling financial systems, was criticized for not addressing the root causes of international financial market instability. The paper also discusses the role of self-fulfilling crises, where individual creditors' rational actions can lead to a panicky reversal of capital flows, and the importance of regulatory and legal frameworks in preventing such crises. The East Asian crisis is seen as an accident of partial financial reforms rather than an inevitable result of an Asian capitalist model.The East Asian financial crisis, which began in mid-1997, has been characterized by a sudden reversal of capital flows, leading to financial panic and deep economic contractions in the affected countries. The crisis has been attributed to both macroeconomic shocks and weaknesses in the financial systems of East Asian countries. These weaknesses included growing short-term foreign debt, rapid bank credit expansion, and inadequate regulation and supervision. The IMF's response, focused on overhauling financial systems, was criticized for not addressing the root causes of international financial market instability. The paper also discusses the role of self-fulfilling crises, where individual creditors' rational actions can lead to a panicky reversal of capital flows, and the importance of regulatory and legal frameworks in preventing such crises. The East Asian crisis is seen as an accident of partial financial reforms rather than an inevitable result of an Asian capitalist model.