In general, the immediate effect of a loss of confidence of investors in any specific economy was reflected in a decline in the inflow of foreign capital or, in many cases, a large withdrawal by nonresidents of previously invested funds from the country.
The widespread flight to quality and liquidity gave rise to a severe tightening of credit conditions in the affected countries: equity prices fell sharply; yields on bonds rose to extremely high levels, followed by soaring interest rates in general, and exchange market pressures intensified as exchange rates went in an uncontrollable tumble.