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Credit Less Recoveries
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Book Synopsis Creditless Recoveries by : Mr.Abdul Abiad
Download or read book Creditless Recoveries written by Mr.Abdul Abiad and published by International Monetary Fund. This book was released on 2011-03-01 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recoveries that occur in the absence of credit growth are often dubbed miracles and named after mythical creatures. Yet these are not rare animals, and are not always miracles. About one out of five recoveries is "creditless", and average growth during these episodes is about a third lower than during "normal" recoveries. Aggregate and sectoral data suggest that impaired financial intermediation is the culprit. Creditless recoveries are more common after banking crises and credit booms. Furthermore, sectors more dependent on external finance grow relatively less and more financially dependent activities (such as investment) are curtailed more during creditless recoveries.
Book Synopsis How Do Credit Conditions Shape Economic Recoveries? by : Fabrizio Coricelli
Download or read book How Do Credit Conditions Shape Economic Recoveries? written by Fabrizio Coricelli and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the role of credit in shaping economic recoveries and tries to shed some light on the phenomenon of creditless recoveries using industry-level data for a large sample of countries. We find that while a failure of the credit stock to recover to its pre-crisis level does not hamper growth, a failure of credit flows to recover slows down economic recovery. Next, we find that industries that are more dependent on external finance recover more quickly in countries with better financial development during creditless recoveries as defined by Calvo et al. (2006a). This indicates that certain mechanisms enable the economy to grow despite the creditless character of recovery. These mechanisms may include the availability of alternative sources of financing such as trade credit, the re-allocation to less credit dependent sectors, or the take-up of unutilized capacity. Finally, we find evidence that industries that are more dependent on trade credit as opposed to bank credit recover more quickly because they are less vulnerable to prolonged credit market disruptions. This 'substitution effect' is stronger during creditless recoveries, giving support to the view that creditless recoveries are a response to protracted disruptions in official credit markets.
Book Synopsis Creditless Recoveries by : International Monetary Fund
Download or read book Creditless Recoveries written by International Monetary Fund and published by International Monetary Fund. This book was released on 2011-03-01 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recoveries that occur in the absence of credit growth are often dubbed miracles and named after mythical creatures. Yet these are not rare animals, and are not always miracles. About one out of five recoveries is "creditless", and average growth during these episodes is about a third lower than during "normal" recoveries. Aggregate and sectoral data suggest that impaired financial intermediation is the culprit. Creditless recoveries are more common after banking crises and credit booms. Furthermore, sectors more dependent on external finance grow relatively less and more financially dependent activities (such as investment) are curtailed more during creditless recoveries.
Book Synopsis Credit-Less Recoveries by : Naotaka Sugawara
Download or read book Credit-Less Recoveries written by Naotaka Sugawara and published by . This book was released on 2017 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Credit-Less Recoveries by : Naotaka Sugawara
Download or read book Credit-Less Recoveries written by Naotaka Sugawara and published by . This book was released on 2013 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Anatomy of Credit-Less Recoveries by : Luisa Corrado
Download or read book Anatomy of Credit-Less Recoveries written by Luisa Corrado and published by . This book was released on 2018 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The recovery from the global crisis that erupted in 2007 shows that the decoupling between real and financial variables during the business cycle can lead to negative and long-lasting consequences for the economy. A key feature of the past global crisis in many countries is that the recovery in aggregate output has not been accompanied by a contemporary pick-up in lending flows to the private sector, rendering the recovery credit-less. This paper uses data on output and credit to study the relative roles of demand and supply drivers of credit growth during economic recoveries on a sample of advanced and emerging countries between 1980 and 2014. Using a simple endowment economy model, the paper shows that credit-less recoveries are correlated with liquidity shocks in real and financial markets and with the pace of private sector deleveraging. The empirical analysis shows that during these episodes demand-side frictions played a relatively larger role in predicting the occurrence of the episodes, reflecting weak demand for liquidity by the private sector in the aftermath of the crisis.
Book Synopsis Recovery from Crises and Lending by : Kata B
Download or read book Recovery from Crises and Lending written by Kata B and published by . This book was released on 2016 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the recovery from the recent crisis, the general role of lending in economic growth, and particularly in the recovery from financial crises, has become an important issue. In this paper, we review the major differences between creditless recovery episodes and recoveries accompanied by growth of credit. Based on the literature, we find that creditless recoveries are relatively frequent phenomena: a quarter or one-fifth of all real economy recoveries take place without the growth of credit. The rate of economic growth is permanently lower during creditless recoveries than in episodes accompanied by credit expansion. Thus, lending activity of the financial intermediary system is usually necessary for fast recovery. When analysing the recovery from the current crisis, we find that a number of factors exist that predispose to creditless recovery. The current growth, the rate of which is lower than before the crisis, is taking place - both in the Member States of the European Union and in Hungary - with a decrease or stagnation of the credit stock. In the medium and long term, it is essential for the sustained growth of the real economy that loans granted by the financial intermediary system once again start to increase.
Book Synopsis Credit Growth and Economic Recovery in Europe After the Global Financial Crisis by : Sergei Antoshin
Download or read book Credit Growth and Economic Recovery in Europe After the Global Financial Crisis written by Sergei Antoshin and published by International Monetary Fund. This book was released on 2017-11-17 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the empirical relationships between credit growth, economic recovery, and bank profitability in Europe after the global financial crisis (GFC). We find that the post-GFC recoveries in Europe have been weaker than previous recoveries, with the “double-dip” recessions in 2011–12 in many countries and the worldwide reach of the GFC explaining the underperformance. Bank lending has been subdued as well, but this appears to have only held back the recovery relatively moderately. A 10 percent increase in bank credit to the private sector is associated with a rise of 0.6–1 percent in real GDP and 2–21⁄2 percent in real private investment. These relationships have not changed significantly during and after the GFC. Loan quality, customer deposits, bank equity price index, and bank capital appear to be closely linked to bank lending. As expected, bank profitability is positively and significantly influenced by credit growth, but this relationship has weakened after the GFC.
Book Synopsis Credit Conditions and Recoveries from Recessions Associated with Financial Crises by : Mr.Prakash Kannan
Download or read book Credit Conditions and Recoveries from Recessions Associated with Financial Crises written by Mr.Prakash Kannan and published by International Monetary Fund. This book was released on 2010-03-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recoveries from recessions associated with a financial crisis tend to be sluggish. In this paper, we present evidence that stressed credit conditions are an important factor constraining the pace of recovery. In particular, using industry-level data, we find that industries relying more on external finance grow more slowly than other industries during recoveries from recessions associated with financial crises. Additional tests, based on establishment size, on alternative definitions of financial crises, and on corporate-government interest rate spreads, support the findings. Moreover, for subsets of industries where financial frictions are more severe, we find much stronger differential growth effects.
Book Synopsis Credit-Less Recoveries by : Dimitris Malliaropulos
Download or read book Credit-Less Recoveries written by Dimitris Malliaropulos and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper argues that the investment-savings imbalances of households and companies play an important role in determining the probability that an economy experiences a credit-less recovery, following a recession. The investment-savings gap determines the need for “external” finance of the private sector in the form of either bank credit or capital market financing. Using a broad dataset covering 96 countries and 272 recovery episodes, we provide empirical evidence that credit-less recoveries are indeed associated with both low and declining financing needs of the private sector, as proxied by the investment-savings gap at the trough of the recession and its adjustment during the downturn. We show that this reflects a rebalancing of wealth towards financial assets during the downturn which can subsequently be used to finance real investment during the recovery stage, even in the absence of positive bank credit flows. Lastly, we provide empirical evidence that, controlling for the change in investment-savings imbalances, economies whose economic downturn was preceded by a credit boom are more likely to experience a credit-less recovery.
Book Synopsis The Role of Non-bank Credit in Credit-less Recoveries by : Matteo Freschi
Download or read book The Role of Non-bank Credit in Credit-less Recoveries written by Matteo Freschi and published by . This book was released on 2015 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis How Do Business and Financial Cycles Interact? by : Mr.Marco Terrones
Download or read book How Do Business and Financial Cycles Interact? written by Mr.Marco Terrones and published by International Monetary Fund. This book was released on 2011-04-01 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the interactions between business and financial cycles using an extensive database of over 200 business and 700 financial cycles in 44 countries for the period 1960:1-2007:4. Our results suggest that there are strong linkages between different phases of business and financial cycles. In particular, recessions associated with financial disruption episodes, notably house price busts, tend to be longer and deeper than other recessions. Conversely, recoveries associated with rapid growth in credit and house prices tend to be stronger. These findings emphasize the importance of developments in credit and housing markets for the real economy.
Book Synopsis Do Phoenix Miracles Exist? Firm-Level Evidence from Financial Crises by : Meghana Ayyagari
Download or read book Do Phoenix Miracles Exist? Firm-Level Evidence from Financial Crises written by Meghana Ayyagari and published by . This book was released on 2017 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides empirical evidence on firm recoveries from financial system collapses in developing countries (systemic sudden stops episodes), and compares them with the experience in the United States in the 2008 financial crisis. Prior research found that economies recover from systemic sudden stop episodes before the financial sector. These recoveries are called Phoenix miracles, and the research questioned the role of the financial system in recovery. Although an average of the macro data across a sample of systemic sudden stop episodes over the 1990s appears consistent with the notion of Phoenix recoveries, closer inspection reveals heterogeneity of responses across the countries, with only a few countries fitting the pattern. Micro data show that across countries, only a small fraction (less than 31 percent) of firms follow a pattern of recovery in sales without a recovery in external credit, and even these firms have access to external sources of cash. The experience of firms in the United States during the 2008 financial crisis also suggests no evidence of credit-less recoveries. An examination of the dynamics of firms' financing, investment and payout policies during recovery periods shows that far from being constrained, the firms in the sample are able to access long-term financing, issue equity, and significantly expand their cash holdings.
Book Synopsis What Happens During Recessions, Crunches and Busts? by : Mr.Ayhan Kose
Download or read book What Happens During Recessions, Crunches and Busts? written by Mr.Ayhan Kose and published by International Monetary Fund. This book was released on 2008-12-01 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the period 1960–2007. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of recessions. Specifically, we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions. JEL Classification Numbers: E32; E44; E51; F42
Download or read book Recovery Risk written by Edward I. Altman and published by Bloomberg Press. This book was released on 2005-01-01 with total page 364 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this ground-breaking new title, Risk Books brings together three prominent editors to provide a timely reference text on loss given default (LGD) measurement and management and the requirements of the Basel II Capital Accord.
Book Synopsis Do Phoenix Miracles Exist? by : Meghana Ayyagari
Download or read book Do Phoenix Miracles Exist? written by Meghana Ayyagari and published by . This book was released on 2011 with total page 65 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Households Borrowing During a Creditless Recovery by : Jaanika Meriküll
Download or read book Households Borrowing During a Creditless Recovery written by Jaanika Meriküll and published by . This book was released on 2012 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:
