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Creditless Recoveries

Author/Editor: Abiad, Abdul | Dell'Ariccia, Giovanni | Li, Bin (Grace)
Authorized for Distribution: March 1, 2011
Electronic Access: Free Full Text (PDF file size is 1,059KB)
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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: Recoveries that occur in the absence of credit growth are often dubbed miracles and named after mythical creatures. Yet these are not rare animals, and are not always miracles. About one out of five recoveries is "creditless", and average growth during these episodes is about a third lower than during "normal" recoveries. Aggregate and sectoral data suggest that impaired financial intermediation is the culprit. Creditless recoveries are more common after banking crises and credit booms. Furthermore, sectors more dependent on external finance grow relatively less and more financially dependent activities (such as investment) are curtailed more during creditless recoveries.
 
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Series: Working Paper No. 11/58
Subject(s): Bank credit | Banking crisis | Business cycles | Credit expansion | Cross country analysis | Developed countries | Economic growth | Economic recovery | Emerging markets | Financial crisis | Industrial investment | Private sector
Author's keyword(s): Credit cycles | credit crunch | banking crisis | financial dependence.
 
English  
    Published:   March 1, 2011        
            Format:   Paper
    Stock No:   WPIEA2011058   Pages:   30
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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