The East Asian crisis began in Thailand in mid 1997, when an ailing financial sector, an export slowdown, and large increases in central bank credit to weak financial institutions triggered a run on the Thai baht. The crisis then spread to other countries in the region as common vulnerabilities and changes in international sentiment triggered large capital outflows. The crisis has sparked a large amount of literature explaining its causes, onset and evolution. Whether sudden shifts in market expectations and confidence were the primary source of the financial turmoil has been hotly debated. Proponents of this view argue that while some macroeconomic fundamentals may have worsened in the mid-1990s, the extent and depth of the crisis cannot be attributed to a deterioration in fundamentals but rather to the panic reaction of domestic and foreign investors (Radelet and Sachs, 1998; Furman and Stiglitz, 1998). Others argue that the crisis reflected structural and policy distortions in the region-including weak macro-economic policies-and that fundamental imbalances triggered the crisis (Corsetti, Pesenti, and Roubini, 1998).