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An Open Economy Model of the Credit Channel Applied to Four Asian Economies

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Author Info
Spiros Bougheas (University of Nottingham)
Paul Mizen (University of Nottingham)
Cihan Yalcin (University of Nottingham)

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Abstract

This paper provides a theoretical model of an open economy credit channel including currency mismatch and financial fragility where exporting firms have access to international credit but non-exporting firms do not. It considers the post-crisis outcome which is predicted to be dramatically different for exporters/ non-exporters. We examine firms' access to external finance in four Asian economies after 1997 using a large panel of balance sheet data. Our paper demonstrates that firm heterogeneity is critical to understanding the open economy credit channel effects post-crisis since smaller and less profitable firms are indeed less likely to obtain credit than larger, export-oriented firms.

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Publisher Info
Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 082007.

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Length: 34 pages
Date of creation: Apr 2007
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Handle: RePEc:hkm:wpaper:082007

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Related research
Keywords: Credit Channel External Finance Asian Crisis

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Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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