It is now widely accepted that asset price bubbles preceded the East Asian currency crisis. An asset price bubble describes an economic episode where the price of an asset (stocks or real estate) rises at a speed unwarranted by economic fundamentals. While asset price bubbles can occur almost anywhere in the economy, their most frequent LDC hosts are the stock and real estate markets. When an asset price bubble collapses, it produces an array of losers and precipitate actual and potential bankruptcies. The paper will try to suggest indicators that suggest answers to these questions: (i) When is an asset price inflation an asset bubble? and (ii) How involved are the banks in its financing?
