Australia’s experience in the late eighties points in this direction, but it is not an absolute rule. Just as Japan has shown that Type II episodes can occur without a lot of foreign capital flows (in fact, there were net outflows), there are many African and Latin American examples of it happening in a heavily regulated environment.
The Asian countries, including Japan, which are now going through these difficulties could not be characterised as possessing highly deregulated financial sectors. The two Asian countries which most closely approximate the deregulated model are Hong Kong and, to a lesser extent, Singapore. To date, these countries have fared reasonably well.