Several pre-crisis indicators suggested that banks in Indonesia and Malaysia were actually
stronger in 1997 than they had been just a few years earlier. For example, average nonperforming
loans actually fell between 1994 and 1996 from 12% to 9% in Indonesia (and even
more sharply for privately-owned Indonesian banks), and from 8% to 4% in Malaysia, according
to data from the Bank for International Settlements (BIS, 1997). While these indicators are
themselves flawed (bad debts often aren=t recognized, or reported, until macroeconomic
difficulties hits), they do undercut the view that Asian banks were recklessly in trouble on the eve
of the crisis.