How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



The Real Effects of Financial Sector Interventions During Crises

Author/Editor: Laeven, Luc | Valencia, Fabian
Authorized for Distribution: March 1, 2011
Electronic Access: Free Full Text (PDF file size is 1,070KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
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: We collect new data to assess the importance of supply-side credit market frictions by studying the impact of financial sector recapitalization packages on the growth performance of firms in a large cross-section of 50 countries during the recent crisis. We develop an identification strategy that uses the financial crisis as a shock to credit supply and exploits exogenous variation in the degree to which firms depend on external financing for investment needs, and focus on policy interventions aimed at alleviating the bank capital crunch. We find that the growth of firms dependent on external financing is disproportionately positively affected by bank recapitalization policies, and that this effect is quantitatively important and robust to controlling for other financial sector support policies. We also find that fiscal policy disproportionately boosted growth of firms more dependent on external financing. These results provide new evidence of a quantitatively important role of credit market frictions in influencing real economic activity.
 
Order a print copy
Series: Working Paper No. 11/45
Subject(s): Banking crisis | Banking sector | Capital | Central banks | Credit | External shocks | Financial crisis | Financial sector | Liquidity management | Monetary policy
Author's keyword(s): Banking crisis | Government intervention | Stabilization policies | Crisis resolution
 
English  
    Published:   March 1, 2011        
            Format:   Paper
    Stock No:   WPIEA2011045   Pages:   35
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.