Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge
This paper examines why some countries experience economic recoveries without pick-up of bank credit (credit-less) and how different this recovery pattern is from the case where credit is increased as an economy recovers (credit-with). To answer th...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/05/17752510/credit-less-recoveries-neither-rare-nor-insurmountable-challenge http://hdl.handle.net/10986/15597 |
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okr-10986-155972021-04-23T14:03:19Z Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge Sugawara, Naotaka Zalduendo, Juan ADVANCED ECONOMIES ADVANCED ECONOMY AFFILIATED ORGANIZATIONS ALTERNATIVE FINANCING ARIMA BANK CREDIT BANKING CRISES BANKING CRISIS BIASES BORROWING BUSINESS CYCLES CAPITAL ACCOUNT CAPITAL ACCOUNTS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS CONSUMER PRICE INDEX CREDIT CRUNCHES CREDIT GROWTH CREDIT PERFORMANCE CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT CRISIS DEMAND FOR CREDIT DEPENDENT DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC OUTLOOK ECONOMIC PERFORMANCE ECONOMIC RECESSION EMERGING MARKET ECONOMIES EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL CREDIT EXTERNAL FINANCE EXTERNAL SHOCK FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCING CONSTRAINT FINANCING SOURCES FISCAL BALANCES FISCAL POLICIES FISCAL POLICY FLOW OF CREDIT GDP GDP DEFLATOR GLOBAL CAPITAL GROWTH RATE HOUSEHOLD FINANCES INFLATION INTERNATIONAL BANK INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INVESTMENT GROWTH INVESTMENT NEEDS JUDGE LEVERAGE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC SHOCKS MARKET ECONOMIES MARKET VALUES MONETARY POLICIES MONETARY POLICY NEED FOR CREDIT OPEN ECONOMIES PRIVATE CREDIT PRODUCTION CAPACITY PRODUCTIVITY GROWTH PUBLIC DEBT REAL GDP RECESSION RECESSIONS RECOVERY PERIOD REGRESSION ANALYSIS SAVINGS SYSTEMIC BANKING CRISES TOTAL FACTOR PRODUCTIVITY TRADE CREDIT TROUGH This paper examines why some countries experience economic recoveries without pick-up of bank credit (credit-less) and how different this recovery pattern is from the case where credit is increased as an economy recovers (credit-with). To answer these questions, the paper uses quarterly data covering 96 countries and identifies 272 recovery episodes. It finds that more than 25 percent of all recoveries are credit-less and around 45 percent of all credit-less recoveries occurred in 2009-10. It also finds that output and investment growth tends to be lower in credit-less events but, by eight quarters after the trough date, the gap between credit-less and credit-with episodes is mostly exhausted. Results of the probit estimations show that the size of the downturn and the extent of external adjustment are associated with the likelihood of credit-less recoveries. Moreover, fiscal loosening tends to be related to credit-less events while monetary easing and a country's decision to seek an International Monetary Fund-supported program reduce the probability of credit-less recoveries. Finally, the model suggests that many countries in the Europe and Central Asia region were likely to experience credit-less recoveries following the global financial crisis in 2008/09. What is more worrisome for them is the fact that they are facing another negative external shock. 2013-09-04T18:40:41Z 2013-09-04T18:40:41Z 2013-05 http://documents.worldbank.org/curated/en/2013/05/17752510/credit-less-recoveries-neither-rare-nor-insurmountable-challenge http://hdl.handle.net/10986/15597 English en_US Policy Research Working Paper;No. 6459 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Europe and Central Asia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADVANCED ECONOMIES ADVANCED ECONOMY AFFILIATED ORGANIZATIONS ALTERNATIVE FINANCING ARIMA BANK CREDIT BANKING CRISES BANKING CRISIS BIASES BORROWING BUSINESS CYCLES CAPITAL ACCOUNT CAPITAL ACCOUNTS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS CONSUMER PRICE INDEX CREDIT CRUNCHES CREDIT GROWTH CREDIT PERFORMANCE CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT CRISIS DEMAND FOR CREDIT DEPENDENT DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC OUTLOOK ECONOMIC PERFORMANCE ECONOMIC RECESSION EMERGING MARKET ECONOMIES EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL CREDIT EXTERNAL FINANCE EXTERNAL SHOCK FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCING CONSTRAINT FINANCING SOURCES FISCAL BALANCES FISCAL POLICIES FISCAL POLICY FLOW OF CREDIT GDP GDP DEFLATOR GLOBAL CAPITAL GROWTH RATE HOUSEHOLD FINANCES INFLATION INTERNATIONAL BANK INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INVESTMENT GROWTH INVESTMENT NEEDS JUDGE LEVERAGE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC SHOCKS MARKET ECONOMIES MARKET VALUES MONETARY POLICIES MONETARY POLICY NEED FOR CREDIT OPEN ECONOMIES PRIVATE CREDIT PRODUCTION CAPACITY PRODUCTIVITY GROWTH PUBLIC DEBT REAL GDP RECESSION RECESSIONS RECOVERY PERIOD REGRESSION ANALYSIS SAVINGS SYSTEMIC BANKING CRISES TOTAL FACTOR PRODUCTIVITY TRADE CREDIT TROUGH |
| spellingShingle |
ADVANCED ECONOMIES ADVANCED ECONOMY AFFILIATED ORGANIZATIONS ALTERNATIVE FINANCING ARIMA BANK CREDIT BANKING CRISES BANKING CRISIS BIASES BORROWING BUSINESS CYCLES CAPITAL ACCOUNT CAPITAL ACCOUNTS CAPITAL ACCUMULATION CAPITAL INFLOWS CAPITAL MARKETS CENTRAL BANK COMMERCIAL BANKS CONSUMER PRICE INDEX CREDIT CRUNCHES CREDIT GROWTH CREDIT PERFORMANCE CURRENT ACCOUNT CURRENT ACCOUNT BALANCE DEBT DEBT CRISIS DEMAND FOR CREDIT DEPENDENT DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC CONDITIONS ECONOMIC OUTLOOK ECONOMIC PERFORMANCE ECONOMIC RECESSION EMERGING MARKET ECONOMIES EMERGING MARKETS EUROPEAN CENTRAL BANK EXCHANGE RATE EXCHANGE RATES EXPENDITURE EXPORTS EXTERNAL CREDIT EXTERNAL FINANCE EXTERNAL SHOCK FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCING CONSTRAINT FINANCING SOURCES FISCAL BALANCES FISCAL POLICIES FISCAL POLICY FLOW OF CREDIT GDP GDP DEFLATOR GLOBAL CAPITAL GROWTH RATE HOUSEHOLD FINANCES INFLATION INTERNATIONAL BANK INTERNATIONAL FINANCIAL STATISTICS INTERNATIONAL RESERVES INVESTMENT GROWTH INVESTMENT NEEDS JUDGE LEVERAGE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC SHOCKS MARKET ECONOMIES MARKET VALUES MONETARY POLICIES MONETARY POLICY NEED FOR CREDIT OPEN ECONOMIES PRIVATE CREDIT PRODUCTION CAPACITY PRODUCTIVITY GROWTH PUBLIC DEBT REAL GDP RECESSION RECESSIONS RECOVERY PERIOD REGRESSION ANALYSIS SAVINGS SYSTEMIC BANKING CRISES TOTAL FACTOR PRODUCTIVITY TRADE CREDIT TROUGH Sugawara, Naotaka Zalduendo, Juan Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| geographic_facet |
Europe and Central Asia |
| relation |
Policy Research Working Paper;No. 6459 |
| description |
This paper examines why some countries
experience economic recoveries without pick-up of bank
credit (credit-less) and how different this recovery pattern
is from the case where credit is increased as an economy
recovers (credit-with). To answer these questions, the paper
uses quarterly data covering 96 countries and identifies 272
recovery episodes. It finds that more than 25 percent of all
recoveries are credit-less and around 45 percent of all
credit-less recoveries occurred in 2009-10. It also finds
that output and investment growth tends to be lower in
credit-less events but, by eight quarters after the trough
date, the gap between credit-less and credit-with episodes
is mostly exhausted. Results of the probit estimations show
that the size of the downturn and the extent of external
adjustment are associated with the likelihood of credit-less
recoveries. Moreover, fiscal loosening tends to be related
to credit-less events while monetary easing and a
country's decision to seek an International Monetary
Fund-supported program reduce the probability of credit-less
recoveries. Finally, the model suggests that many countries
in the Europe and Central Asia region were likely to
experience credit-less recoveries following the global
financial crisis in 2008/09. What is more worrisome for them
is the fact that they are facing another negative external shock. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Sugawara, Naotaka Zalduendo, Juan |
| author_facet |
Sugawara, Naotaka Zalduendo, Juan |
| author_sort |
Sugawara, Naotaka |
| title |
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| title_short |
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| title_full |
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| title_fullStr |
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| title_full_unstemmed |
Credit-less Recoveries : Neither a Rare nor an Insurmountable Challenge |
| title_sort |
credit-less recoveries : neither a rare nor an insurmountable challenge |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/05/17752510/credit-less-recoveries-neither-rare-nor-insurmountable-challenge http://hdl.handle.net/10986/15597 |
| _version_ |
1764429545245507584 |