Slowdown of Credit Flows in Jordan in the Wake of the Global Financial Crisis; Supply or Demand Driven?
This paper estimates a disequilibrium model of credit supply and demand to evaluate the relative role of these factors in the slowdown of credit flows in the Jordanian economy in the wake of the global financial crisis. The empirical analysis suggests that the credit stagnation is mainly driven by the restricted credit supply amid tighter monetary policy conditions in Jordan relative to the United States, as evidenced by the widened interest differential between the Central Bank of Jordan (CBJ) re-discount and the U.S. Federal Reserve funds rates. Although it appears that demand side factors related to the slowdown of economic activity have also had an impact, their role has been relatively modest. The estimation results imply that economic policies targeted towards stimulating supply of credit are likely to be a more effective tool for expanding credit flows relative to demand stimulating policies.
|Date of creation:||01 Nov 2010|
|Date of revision:|
|Contact details of provider:|| Postal: International Monetary Fund, Washington, DC USA|
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- JÃ©rÃ´me Vandenbussche & Stanley B Watt & Szabolcs Blazsek, 2009. "The Liquidity and Liquidity Distribution Effects in Emerging Markets; The Case of Jordan," IMF Working Papers 09/228, International Monetary Fund.
- Neyer, Ulrike, 2004. "Asymmetric information in credit markets--implications for the transition in Eastern Germany," Economic Systems, Elsevier, vol. 28(1), pages 61-78, March.
- Adolfo Barajas & Roberto Steiner, 2002. "Why Don't They Lend? Credit Stagnation in Latin America," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 156-184.
- Kenc, Turalay & Dibooglu, Sel, 2010. "The 2007-2009 financial crisis, global imbalances and capital flows: Implications for reform," Economic Systems, Elsevier, vol. 34(1), pages 3-21, March.
- P.R. Agenor & J. Aizenman & A. Hoffmaister, 2000.
"The Credit Crunch in East Asia: What can Bank Excess Liquid Assets Tell us?,"
NBER Working Papers
7951, National Bureau of Economic Research, Inc.
- Agenor, Pierre-Richard & Aizenman, Joshua & Hoffmaister, Alexander W., 2004. "The credit crunch in East Asia: what can bank excess liquid assets tell us?," Journal of International Money and Finance, Elsevier, vol. 23(1), pages 27-49, February.
- Agenor, Pierre-Richard & Aizenman, Joshua & Hoffmaister, Alexander, 2000. "The credit crunch in East Asia : what can bank excess liquid assets tell us ?," Policy Research Working Paper Series 2483, The World Bank.
- Bernd Lucke, 2004. "Real Interest Rates and Productivity Shocks : Why Are Business Cycles Negatively Correlated Between the European Union and Jordan?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(6), pages 82-94, November.
- Atish R. Ghosh & Swart R. Ghosh, 1999.
"East Asia in the Aftermath; Was there a Crunch?,"
IMF Working Papers
99/38, International Monetary Fund.
- Tarron Khemraj, 2010. "What does excess bank liquidity say about the loan market in Less Developed Countries?," Oxford Economic Papers, Oxford University Press, vol. 62(1), pages 86-113, January.
- Kim, Hyun E., 1999. "Was the credit channel a key monetary transmission mechanism following the recent financial crisis in the Republic of Korea?," Policy Research Working Paper Series 2103, The World Bank.
- Bernd Lucke, 2004. "Real Interest Rates and Productivity Shocks : Why Are Business Cycles Negatively Correlated Between the European Union and Jordan?," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 40(6), pages 82-94, November.
- Christophe Hurlin & R. Kierzenkowski, 2007.
"Credit Market Disequilibrium in Poland: Can we find what we expect? Non stationarity and the Short Side Rule,"
- Hurlin, Christophe & Kierzenkowski, Rafal, 2007. "Credit market disequilibrium in Poland: Can we find what we expect?: Non-stationarity and the short-side rule," Economic Systems, Elsevier, vol. 31(2), pages 157-183, June.
- Maddala, G S & Nelson, Forrest D, 1974. "Maximum Likelihood Methods for Models of Markets in Disequilibrium," Econometrica, Econometric Society, vol. 42(6), pages 1013-30, November.
- Tomasz Daras & Joanna Tyrowicz, 2009.
"Breeding Ones' Own Subprime Crisis,"
2009-01, Faculty of Economic Sciences, University of Warsaw.
- Daras, Tomasz & Tyrowicz, Joanna, 2009. "Breeding Ones' Own Subprime Crisis: The effects of labour market on financial system stability," MPRA Paper 15202, University Library of Munich, Germany.
- Daras, Tomasz & Tyrowicz, Joanna, 2011. "Breeding one's own sub-prime crisis: The labour market effects on financial system stability," Economic Systems, Elsevier, vol. 35(2), pages 278-299, June.
- Laffont, Jean-Jacques & Garcia, Rene, 1977. "Disequilibrium Econometrics for Business Loans," Econometrica, Econometric Society, vol. 45(5), pages 1187-1204, July.
- Ernst R. Berndt & Bronwyn H. Hall & Robert E. Hall & Jerry A. Hausman, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 653-665 National Bureau of Economic Research, Inc.
- Seza Danisog¬Lu Rhoades & Z. Nuray Gãœner, 2003. "Economic Uncertainty and Credit Crunch : Evidence from an Emerging Market," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 39(4), pages 5-23, July.
- Adolfo Barajas & Roberto Steiner, 2002. "Credit Stagnation in Latin America," IMF Working Papers 02/53, International Monetary Fund.
- Marek Dabrowski, 2009.
"The Global Financial Crisis: Lessons for European Integration,"
CASE Network Studies and Analyses
0384, CASE-Center for Social and Economic Research.
- Dabrowski, Marek, 2010. "The global financial crisis: Lessons for European integration," Economic Systems, Elsevier, vol. 34(1), pages 38-54, March.
- Tushar Poddar & Hasmik V Khachatryan & Randa Sab, 2006. "The Monetary Transmission Mechanism in Jordan," IMF Working Papers 06/48, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/256. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow)or (Hassan Zaidi)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.