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Money Demand, Bank Credit, and Economic Performance in Former Socialist Economies
Author:
Mr. Manmohan S. Kumar
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Mr. Guillermo Calvo null

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Series:
IMF Working Papers
Volume/Issue:
Volume 1994: Issue 003
Language:
English
Publication Date:
01 Jan 1994
DOI:
https://doi.org/10.5089/9781451841831.001
ISBN:
9781451841831
ISSN:
1018-5941
Pages:
48
Keywords:
WP; broad money; insolvent firm; bank credit; enterprise liquidity; liquidity accumulation; gross investment; adverse selection; state enterprise; commercial bank; Credit; Bank credit; Inflation; Demand for money; Commercial banks; Eastern Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper examines factors determining the allocation of bank credit to the enterprise sector, and the implications of this allocation for aggregate supply and macro-economic performance, in the former socialist economies. It first develops a model to explain how changes in demand for money by the household sector directly influence the availability of working capital, which in turn determines aggregate output and employment. It then examines factors influencing the allocation of bank credit between enterprises and other borrowers, in particular the government. Finally, the paper discusses relative merits of bank finance and equity capital in financing medium- and long-term investment, and constraints on the development of efficient equity markets.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund