Initial conditions in the year before the crisis in Thailand, Indonesia, Malaysia, the Philippines, and Korea in 1997 indicate that I. capital inflows/GDP were very low.
II) nonperforming bank loan ratios were high.
III) current account deficits were high.
IV) credit growth was fast.

Question

Quizplus · Accepted Answer

The initial conditions in the year before the crisis in Thailand, Indonesia, Malaysia, the Philippines, and Korea in 1997 were characterized by four key indicators. The nonperforming bank loan ratios were high (II), the current account deficits were high (III), and credit growth was fast (IV), indicating an overheated economy. However, capital inflows/GDP were not necessarily very low (I), as the capital inflows were one of the factors that fueled the fast credit growth and resulted in the current account deficits. Therefore, choices II, III, and IV represent the correct indicators of the initial conditions before the crisis.

Initial Conditions in the Year Before the Crisis in Thailand