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Policy Regime Change And Corporate Credit In Bulgaria: Asymmetric Supply And Demand Responses

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  • Rumen Dobrinsky

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  • Nikolay Markov

    ()

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    Abstract

    The paper seeks to assess how a major policy regime change – such as the introduction of the currency board in Bulgaria – affects the flow of bank credit to the corporate sector. An attempt is made to identify the determinants of corporate credit separately from the viewpoint of lenders and borrowers. The estimated credit supply and credit demand equations provide empirical evidence of important changes in microeconomic behavioral patterns which can be associated with the policy regime change. The results also suggest a considerable asymmetry in the response of credit supply and credit demand to the policy shock: while the supply shifts were quite pronounced, the patterns of firms’ credit demand remained fairly stable. The policy implications of the detected asymmetry in microeconomic adjustment are also discussed in the paper.

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    File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp607.pdf
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    Bibliographic Info

    Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 2003-607.

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    Length: 33 pages
    Date of creation: 01 Sep 2003
    Date of revision:
    Handle: RePEc:wdi:papers:2003-607

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    Related research

    Keywords: corporate credit; credit supply and credit demand; regime change; currency board; transition economy;

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    1. Gertler, Mark, 1988. "Financial Structure and Aggregate Economic Activity: An Overview," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(3), pages 559-88, August.
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    16. Bratkowski, A. & Grosfeld, I. & Rostowski, J., 1998. "Investment and Finance in De Novo Private Firms: Empirical Results form the Czech Republic, Hungary and Poland," DELTA Working Papers 98-19, DELTA (Ecole normale supérieure).
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