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Bank Credit in Argentina in the Aftermath of the Mexican Crisis: Supply or Demand Constrained?
Author:
Mr. Luis Catão
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Series:
IMF Working Papers
Volume/Issue:
Volume 1997: Issue 032
Language:
English
Publication Date:
01 Mar 1997
DOI:
https://doi.org/10.5089/9781451979862.001
ISBN:
9781451979862
ISSN:
1018-5941
Pages:
28
Keywords:
WP; interest rate; credit rationing; adverse selection; lending capacity; credit demand; problem loan; lending interest rate; debt stock adjustment; Credit; Bank credit; Loans; Domestic credit; Public sector
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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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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund