Most economists appear to agree on the presence of significant structural weaknesses which undermined the fundamentals of the region. However, it is clear that there are differences of opinion on the role of the structural weaknesses discussed above. There are currently two dominant views emerging from the current academic debate on the crisis: fundamentals or financial panic. The first view emphasises the importance of weak fundamentals arising from structural weaknesses while the second view emphasises the role of financial panic as the essential driver of the crisis. However, as has been noted by some commentators, both of these views are not entirely inconsistent with one another. The latter, a third view, appears to approximate reality the best.

The third view synthesises the first two by noting that a confluence of the factors listed above appeared to produce an environment where financial institutions were the main source of financing, over-guaranteed, under-regulated and faced significant competitive pressures. In such an environment, financial institutions were encouraged to make decisions not on the basis of expected returns-as they normally would-but instead on the basis of "ideal returns"-ie the value a variable would take if the lender lives in the best of all possible worlds. It has been demonstrated that under such circumstances, a financial intermediary, due to its perception of being implicitly guaranteed by the government, would be willing to bid on the price of an asset based on "ideal returns" rather than expected future returns. This leads to asset prices being bid up by over-investment. The distortion, the argument goes, will persist for as long as the financial intermediary continues to believe it will be insured against the investment failing to yield the "ideal" value. However, at some stage, the cumulative quasi-fiscal cost of these implicit guarantees becomes too large to be sustained and the government is either forced to withdraw support or is perceived to be forced to do so. Should this occur or if the financial intermediary believes that this is likely to occur, the ideal return collapses and asset prices will fall rapidly leading to loan defaults and losses.

It has been argued that once the collapse occurs, financial panic can lead to a situation in which capital withdrawal from the region became grossly disproportionate to the underlying problems. This view highlights that fact that financial intermediation which relies mainly on banking-type institutions has always been plagued by the basic problem of maturity mismatches which brings along with it the attendant risk of self-fulfilling crises due to the sequential servicing constraint faced by banks. A corollary of this is that even a reasonably sound economy can be subject to panic and devastating runs on its currencies due to self-fulfilling rumours. According to this view, a combination of panic on the part of the international investing community, policy mistakes at the onset of the crisis by Asian governments and poorly-designed rescue programmes turned the withdrawal of capital into a full-fledged financial panic and deepened the crisis by more than was either necessary or inevitable.