An Empirical Study of Financial Crises Among Middle-Income Countries between 1993-2003

One of the puzzling phenomena in the emerging financial market was that financial crises often took place in middle-income countries rather than in low-income countries. This study empirically studies the financial crises between 1993 and 2003 and finds that the over-reliance on foreign debt, particularly short-term debt and volatility of net income for these countries were the most important factors which caused financial crises in the middle-income countries. Therefore, for the developing countries, prudent policy towards foreign debt, particularly short-term debt, and financial income stability are the two most important preventive measures against financial crises