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Investment Bank Failures In Asia Essay

Peregrine's Strategy What were the external and internal factors that led to the collapse?

There are many factors that could explain the rapid failure of Peregrine's failure that seemed to appear in such a short time frame. It seems fairly obvious that management bears the burden of responsibility on many levels, however, there are other explanations that could also be introduced, although the causes are debatable. However, the mainstream press seemed to focus purely on the management capabilities of the company.

"The collapse of Peregrine Investments Holdings Ltd., the biggest business failure in Hong Kong during the Asian economic crisis, was caused by bad management and not the crisis itself, according to a government inspector's report (Manuel, 2001)."

In fact, it was recommended that the courts restrict the top-level management team from operating for fifteen years based on the management team's incompetence in running the investment bank.

Although such a judgment may seem reasonable, the investigators for the case were not able to actually find any means of fraud which would suggest that the failure could be the product of bad judgment. The corporation began as a domestic player that specialized in fixed-income business investments that could compete well in the Asian markets...

The success of the firm depended on its internal ability to match investors and borrowers in a range of different financial instruments.
As the Asian market's sole domestic provider, the organization had a significant edge on many of the international players that were competing in the market. However, their initial success undoubtedly led to a level of hubris that ultimately led to the company's demise. The company attempted to expand faster than it could have in a more sustainable growth model, and then in 1997, the Asian crisis left the firm vulnerable to external events that ultimately led to the demise of the company. It was most likely the management's attempt to leverage the company's previous successes on an ambitious growth path that led to the company's vulnerable position during the crisis.

2. Evaluate Peregrine's strategy and its implementation. What did it do right, and what did it do wrong? Was Peregrine's collapse a failure of strategy? A failure of implementation? Or just plain bad luck?

It would be hard to explain Peregrine's demise with only bad luck. The company obviously engaged in many speculative behaviors that put the organizations at risk. While the fall of the Steady State obviously contributed to the company's weakened…

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Works Cited

Gargan, E. (N.d.). Hong Kong's Peregrine Soared Like a Falcon, Sank Like a Reckless Bank. Retrieved from NY Times: https://partners.nytimes.com/library/financial/011398asia-hongkong-peregrine.html

Manuel, G. (2001, March 27). Poor Management Triggered Collapse Of Peregrine Investments, Report Says. Retrieved from The Wall Street Journal: http://www.wsj.com/articles/SB985626919629217466
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