Identifying the Demand and Supply Effects of Financial Crises on Bank Credit--Evidence from Taiwan.

In the aftermath of the Asian financial crisis, Taiwan's bank credits slowed down dramatically while the economy experienced one of the worst recessions in recent history. Whether the slowdown was mainly caused by the demand or the supply effect is unclear. An innovative empirical approach is adopte...

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Publicado en:Southern Economic Journal Vol. 75; no. 1; pp. 26 - 50
Autores principales: Nan-Kuang Chen, Hung-Jen Wang
Formato: Artículo
Publicado: Wiley-Blackwell Jul2008
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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        10.1002/j.2325-8012.2008.tb00890.x
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        atl: Identifying the Demand and Supply Effects of Financial Crises on Bank Credit--Evidence from Taiwan.
      aug:
        au:
          Nan-Kuang Chen
          Hung-Jen Wang
        affil:
          Department of Economics, National Taiwan University, 21 Hsu Chow Road, Taipei 10020, Taiwan
          Institute of Economics, Academia Sinica, 128 Academia Road, Taipei 11529, Taiwan
      su:
        Taiwan
        Financial crises
        Supply & demand
        Recessions
        Savings
        Empirical research
        Economic development
        Bank loans
        Moneylenders
      sug:
        subj:
          Financial crises
          Supply & demand
          Recessions
          Savings
          Empirical research
          Economic development
          Taiwan
          Consumer Lending
          Bank loans
          Moneylenders
      ab: In the aftermath of the Asian financial crisis, Taiwan's bank credits slowed down dramatically while the economy experienced one of the worst recessions in recent history. Whether the slowdown was mainly caused by the demand or the supply effect is unclear. An innovative empirical approach is adopted that uses the short-side rule of bank loans' market transactions to help infer the relative shifts of the demand and supply. For the disaggregate data, a novel model is proposed that accommodates the short-side rule and yet requires only data from the borrowers or the lenders. We find that a large decline in supply is mainly responsible for the slowdown, and we identify the deposit drain and the increase in overdue loans as the main contributing factors. Results also indicate that smaller firms are disproportionately affected by the credit cutback, and that shrinkages in alternative financing sources might have indirectly contributed to the excess demand.
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    language: English
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