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Creditless Recoveries

Author

Listed:
  • Abdul d Abiad
  • Giovanni Dell'Ariccia
  • Grace B Li

Abstract

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.

Suggested Citation

  • Abdul d Abiad & Giovanni Dell'Ariccia & Grace B Li, 2011. "Creditless Recoveries," IMF Working Papers 11/58, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:11/58
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Banking crisis; Credit cycles; credit crunch; financial dependence; banking; banking crises; recessions; recession; Financial Markets and the Macroeconomy;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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