Compared to more advanced economies emerging markets seem to be more prone to institutional and financial sector weaknesses. Consequently, they are less capable to manage these large capital flows. Capital flows often depend not only on domestic fundamentals and policy management, but also on external variables.
Higher interest rates in the US or crises in other countries can bring about abrubt changes in financial conditions and trigger crises in emerging markets. But domestic policy management is very important as well. Recent studies, including one made at the Bank of Finland, show that excessive borrowing by the government or private banks seem to be key reasons for the recent crises.