Unfolding the spatial architecture of the East Asian ®nancial crisis: the organizational response of global investment banks

The East Asian ®nancial crisis had a major impact on the regional operations of banks, and in particular investment banks. As the ®nancial crisis deepened during 1997 and 1998, numerous European and North American banks began to restructure their organizational capabilities in capital markets, foreign exchange, securities, and project ®nance, as they became exposed to bad debts and reductions in the volume of trading in the region's ®nancial markets. Banks managed the risk and uncertainty of the ®nancial crisis by downsizing employment levels in order to reduce ®xed costs in the region. Unfortunately, the plight of the Asian banks was far worse than their non-Asian counterparts, not least because they could not o€set major losses in the region against pro®ts generated in other regions. In this paper, we speci®cally explore the organizational and employment change in investment banking to investigate the wider political economy of the crisis, and its e€ect upon the global ®nancial system. Following a detailed theoretical re-reading of the crisis, which centres on the `missing geography' that sustains the operation of the global ®nancial system, we focus upon organizational and employment change in investment banking. We suggest that the Asian ®nancial crisis a€ected the global ®nancial architecture of the region, and that investment banks, being ̄uid, ̄exible, and responsive organizations, were able to react very quickly to the crisis, as if it were just one more event in the continuous (mal)functioning of the capitalist system. Ó 2001 Elsevier Science Ltd. All rights reserved.