Financial vulnerability and the Philippine currency crisis: A causal study from 1994 to 1998

• Main Authors: Chua, Jon Cashel T., Gidwani, Pavan C., Malantic, Joseph P., Rabonza, Michael Jeremy C.
• Format: text
• Language: English
• Published: Animo Repository 1999
• Subjects: Currency crises > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/16577
• Institution: De La Salle University

This paper tackles Financial Vulnerability as the cause of the Philippine Currency crisis. Financial Vulnerability is the high probability of a successful speculative attack against a country's currency. This was indicated by the imbalances in a set of macroeconomic factors that were peculiar to the Philippine setting and delineated by World Bank studies. The time frame set for this paper was the years 1994-1998 which facilitated the analysis of three basic particulars, namely: the first signs of such imbalances the crisis episode itself and the period after the crisis episode showing the effects of policy action by monetary authorities. This qualitative analysis would be supported by multiple regression tests that proved the proponents' two theories, aptly presented in two models. The first showed that the five macroeconomic factors caused the movement of the Philippine Peso under the period of study and the second, the Thailand Baht acting as a moderating variable along with the originally stated factors caused the movement of Philippine Peso during the stated time frame. In both models, the proponents arrived at statistical measures that proved their theories, answered their hypotheses and addressed their objectives. From all this, qualitative and quantitative conclusions were reached and subsequent recommendations were made.