The cause of the economic crisis in the latter half of the 1990s, which seriously affected countries like Indonesia, Thailand, Malaysia, and South Korea, was a combination of factors. One of the primary causes was the mismanagement of financial resources and the financial sector in these countries. This mismanagement included excessive borrowing, risky lending practices, and weak financial regulations.

Another significant factor was the prolonged over-valuation of local currencies in relation to major Western currencies. This made exports more expensive and less competitive, leading to a decline in export revenues and a strain on the economies of these countries.

While the downswing and recession in Western economies did have some impact on these export-oriented countries, it was not the primary cause of the crisis.

Therefore, the correct answer would be the first option: mismanagement of financial resources and the financial sector, in general.