The Breakdown of Credit Relations Under Conditions of a Banking Crisis : A Switching Regime Approach

Author/Editor:

Sònia Muñoz

Publication Date:

July 1, 2000

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:

This paper empirically analyzes the effects of a banking crisis on bank credit to the private sector for a panel of developing, developed, and transition economies for the period 1970-1998. The model illustrates how the behavior of the bank credit function changes during a banking crisis, reflecting a generalized disruption in the stability of behavioral parameters. Usual links such as interest rate signaling for lending, and synergy between deposits and loans, fall apart. Moreover, this study gives support to Third Generation Models in their ability to predict banking crises. Based on the empirical findings, the paper then provides policy implications for monetary policy.

Series:

Working Paper No. 00/135

Subject:

English

Publication Date:

July 1, 2000

ISBN/ISSN:

9781451855692/1018-5941

Stock No:

WPIEA1352000

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

24

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