Factors that led to worsening conditions in Mexico's 1994-1995 financial markets,but did not lead to worsening financial market conditions in East Asia in 1997-1998 include
A)rise in interest rates abroad.
B)bankers' lack of expertise in screening and monitoring borrowers.
C)deterioration of banks' balance sheets because of increasing loan losses.
D)stock market decline.

Question

Quizplus · Accepted Answer

The rise in interest rates abroad, particularly in the United States, was a significant factor that led to worsening conditions in Mexico's financial markets in 1994-1995 but did not have the same impact on East Asia's financial markets in 1997-1998. Higher interest rates in the US made American financial assets more attractive, leading to capital outflows from Mexico and putting pressure on the Mexican peso. In contrast, the East Asian financial crisis was more directly related to issues of excessive borrowing and weaknesses in the financial systems of the affected countries, rather than a direct result of rising interest rates abroad.

Factors That Led to Worsening Conditions in Mexico's 1994-1995 Financial