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Creditless Recoveries

  • Abiad, Abdul
  • DellAriccia, Giovanni
  • Li, Bin

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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8301.

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Date of creation: Mar 2011
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Handle: RePEc:cpr:ceprdp:8301
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  8. Guillermo A. Calvo & Alejandro Izquierdo & Ernesto Talvi, 2006. "Sudden Stops and Phoenix Miracles in Emerging Markets," American Economic Review, American Economic Association, vol. 96(2), pages 405-410, May.
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