Bank Credit in Argentina in the Aftermath of the Mexican Crisis: Supply or Demand Constrained?
March 1, 1997
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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.
Subject: Bank credit, Banking, Credit, Domestic credit, Economic sectors, Financial institutions, Loans, Money, Public sector
Keywords: adverse selection, Bank credit, Credit, credit demand, credit rationing, debt stock adjustment, Domestic credit, interest rate, lending capacity, lending interest rate, Loans, problem loan, Public sector, WP
Pages:
28
Volume:
1997
DOI:
Issue:
032
Series:
Working Paper No. 1997/032
Stock No:
WPIEA0321997
ISBN:
9781451979862
ISSN:
1018-5941
