The combination of the investment boom and fixed exchange rates led to over-investment
in some sectors, and a moderate decline in investment quality. One indicator of eroding
investment quality is the fact that incremental capital-output ratios rose across the region,
although it is worth noting that they rose by an amount not much greater than in several non-crisis
emerging markets. In each country, an increasing share of bank loans went towards construction,
real estate, finance, and other services.