East Asia in the Aftermath: Was there a Crunch?
March 1, 1999
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Summary
This paper uses a disequilibrium framework to investigate a possible credit crunch in the East Asian crisis countries (Indonesia, Korea, and Thailand) during 1997-98. It defines a credit crunch as a situation in which interest rates do not equilibrate supply and demand for credit and the aggregate amount is supply constrained, i.e. there is quantity rationing. In all three countries, rising real interest rates and weakening economic activity lowered credit demand and (with the exception of Indonesia in late 1997) there is little evidence of quantity rationing at the aggregate level—although individual firms may have lost access to credit.
Subject: Bank credit, Capital adequacy requirements, Commercial banks, Credit, Financial institutions, Financial regulation and supervision, Financial services, Money, Real interest rates
Keywords: Bank credit, Capital adequacy requirements, Commercial banks, Credit, credit condition, credit crunch, credit demand, credit financing, credit supply, East Asia, East Asia Currency Crises, lending capacity, Real interest rates, WP
Pages:
21
Volume:
1999
DOI:
Issue:
038
Series:
Working Paper No. 1999/038
Stock No:
WPIEA0381999
ISBN:
9781451845679
ISSN:
1018-5941
