The key factor leading to the financial crises in Mexico and the East Asian countries was ________.
A)severe fiscal imbalances
B)a deterioration in banks' balance sheets because of increasing loan losses
C)a sharp increase in the stock market
D)a sharp decline in interest rates

Question

Quizplus · Accepted Answer

The key factor leading to the financial crises in Mexico and the East Asian countries was a deterioration in banks' balance sheets due to increasing loan losses. This was caused in part by imprudent lending practices, as well as by external shocks such as the sharp drop in commodity prices and a tightening of global financial conditions. Fiscal imbalances, stock market fluctuations, and interest rate movements may have played a role, but they were not the primary cause of the crises.

The Key Factor Leading to the Financial Crises in Mexico