Foreword by Donald J. Puchala, Ph.D. This book considers how a financial crisis develops and how a government responds to a financial crisis. In an attempt to shed light on these questions, it closely examines two cases: Mexico during the Mexican Peso Crisis of 1994 to 1995 and Malaysia during the Asian Financial Crisis of 1997 to 1998. S mer argues that economic explanations of financial crises fail to fully answer these questions since they do not pay enough attention to non-economic factors stemming from a county's political, societal, institutional and external contexts. The examination of the Mexico and Malaysia cases illustrates this argument and shows that multiple non-economic factors--domestic political, societal, institutional, psychological, and ideological factors as well as external influences and pressures--can play roles as significant as economic factors. Interplay of these non-economic factors with economic ones brought these financial crises and shaped the Mexican and the Malaysian governments' policy behaviors.