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Listening to the Market: Estimating Credit Demand and Supply from Survey Data

Author

Listed:
  • Satoru Kanoh
  • Chakkrit Pumpaisanchai

Abstract

The literature referring to the credit slowdown has been plagued by the identification problem of whether a decline in a bank's credit is derived from the demand or the supply side. This paper proposes an original approach in directly estimating the credit demand and the credit supply from survey data. Using the TANKAN and the recently published Senior Loan Officer survey data, the paper demonstrates that the observed lending amount did not change much during the period of study; however, the observed lending amount deviated, as one might expect, from the estimated credit demand and credit supply for every firm size. This credit mismatch presents evidence of credit market imperfections and is of interest for further investigation as a possible explanation of firms' liquidity constraints and banks' lending mechanisms.

Suggested Citation

  • Satoru Kanoh & Chakkrit Pumpaisanchai, 2006. "Listening to the Market: Estimating Credit Demand and Supply from Survey Data," Hi-Stat Discussion Paper Series d05-137, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:hstdps:d05-137
    as

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    File URL: https://hit-u.repo.nii.ac.jp/record/2050499/files/D05-137.pdf
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    References listed on IDEAS

    as
    1. Kazuo Ogawa, 2003. "Financial Distress and Corporate Investment: The Japanese Case in the 90s," ISER Discussion Paper 0584, Institute of Social and Economic Research, The University of Osaka.
    2. Wako Watanabe, 2004. "Prudential Regulation, the Credit Crunch" and the Ineffectiveness of Monetary Policy: Evidence from Japan," ISER Discussion Paper 0617, Institute of Social and Economic Research, The University of Osaka.
    3. Oliner, Stephen D & Rudebusch, Glenn D, 1996. "Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance: Comment," American Economic Review, American Economic Association, vol. 86(1), pages 300-309, March.
    4. Woo, David, 2003. "In Search of "Capital Crunch": Supply Factors behind the Credit Slowdown in Japan," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(6), pages 1019-1038, December.
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    Cited by:

    1. Isabelle Agier & Ariane Szafarz, 2011. "Credit to Women Entrepreneurs: The Curse of the Trustworthier Sex," Working Papers CEB 11-005, ULB -- Universite Libre de Bruxelles.
    2. Ogawa, Kazuo, 2011. "Balance sheet deterioration and credit allocations: Japanese evidence from the short-term economic survey of enterprises," Japan and the World Economy, Elsevier, vol. 23(2), pages 86-96, March.
    3. Becsi, Zsolt & Li, Victor E. & Wang, Ping, 2013. "Credit mismatch and breakdown," European Economic Review, Elsevier, vol. 59(C), pages 109-125.

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    Keywords

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    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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