In the current global environment, economists are continuously thriving to keep the pace of meeting global challenges faced by their economies. The trends in this environment are inclusive of the liquidity and asset price bubbles problems. The world economies have been continuously engaged in dealing with dim sides of liberalization and globalization policies after . The externalities of these policies have tended the economists to take rational decisions in order to strike the balance between different macroeconomic variables and hence achieve the objective of the financial stability in the economy. In particular, the Emerging Market Economies have been
recorded to be the destinations, where a larger bunch of the conditions leading to financial instability, can be observed. Also, it is seen that the typical banking system, exchange rate regimes, foreign funds inflows, are majorly playing role in these economies. Getting more specific, in the past years, Emerging Markets have faced a lot of the financial shocks and triggers, whether it is Asian Financial Crisisor Global Financial Crisis. The reasons behind these crises are identified to be the unfruitful policies of Central Banks, poor debt management structure, stiffness to the exchange rate and trade, and volatile capital flows.