Bank Credit in Argentina in the Aftermath of the Mexican Crisis: Supply or Demand Constrained?

Author/Editor:

Luis Catão

Publication Date:

March 1, 1997

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

Liquidity in the banking sector in Argentina reached new heights in early 1996 with the sharp reflow of deposits in the aftermath of the 1995 banking crisis. Yet, this did not translate into a similar recovery of credit to the private sector. Two hypotheses have been raised to explain this mismatch. One is that credit to the private sector was supply constrained because of adverse selection mechanisms exacerbated by the crisis. An alternative hypothesis is that credit was demand constrained, as unemployment remained high and the debt stock adjustment unwound only slowly through the first half of 1996. This paper examines these hypotheses.

Series:

Working Paper No. 1997/032

Subject:

Bank credit Banking Credit Domestic credit Economic sectors Financial institutions Loans Money Public sector

English

Publication Date:

March 1, 1997

ISBN/ISSN:

9781451979862/1018-5941

Stock No:

WPIEA0321997

Pages:

28

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