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

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  • Spiros Bougheas

    (University of Nottingham)

  • Paul Mizen

    (University of Nottingham)

  • Cihan Yalcin

    (University of Nottingham)

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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Bibliographic 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
Date of revision:
Handle: RePEc:hkm:wpaper:082007

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Keywords: Credit Channel; External Finance; Asian Crisis;

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