Stock and bond prices tumbled and investors rushed to pull out of money-market funds that were heavily overweight in bonds issued by credit card companies. While the 1997 crisis had been brought about by the inability of financial institutions to manage corporate sector risk adequately, the primary reason for the credit card crisis was a failure of their household-sector risk management.
For one thing, investors are dealing with companies operating far away, in a very different economic and political environment. For another, financial regulatory and supervisory practices in some of these countries are less welldeveloped and transparent. In addition, investors may have felt rather well “protected” from risks – for a couple of reasons.