Indeed, this process of public capital injections is already well under way in Korea, Thailand and Indonesia. Japan, it seems, is still struggling with the concept. Asia’s domestic private investors, for the most part, have taken such an enormous hit to net worth that it is difficult to imagine them being an early or substantial source of new capital for banks.
Thus, “creative destruction” turned into “destructive creation”. However, the crisis proves that the institutional framework has not kept pace with the fast speed of innovation. In particular, the lack of adequate checks and balances at all levels of control has led to increased vulnerabilities and risks.