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Bank Credit in Argentina in the Aftermath of the Mexican Crisis; Supply or Demand Constrained?

Author

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  • Luis Catão

Abstract

Liquidity in the banking sector in Argentina reached new heights in early 1996 with the sharp reflow of deposits in the aftermath of the 1995 banking crisis. Yet, this did not translate into a similar recovery of credit to the private sector. Two hypotheses have been raised to explain this mismatch. One is that credit to the private sector was supply constrained because of adverse selection mechanisms exacerbated by the crisis. An alternative hypothesis is that credit was demand constrained, as unemployment remained high and the debt stock adjustment unwound only slowly through the first half of 1996. This paper examines these hypotheses.

Suggested Citation

  • Luis Catão, 1997. "Bank Credit in Argentina in the Aftermath of the Mexican Crisis; Supply or Demand Constrained?," IMF Working Papers 97/32, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:97/32
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    Citations

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    Cited by:

    1. Andrew Powell & Marcela Cristini & Ramiro Moya, 2001. "The Importance of an Effective Legal System for Credit Markets: The Case of Argentina," Research Department Publications 3125, Inter-American Development Bank, Research Department.
    2. Pierre-Richard Agénor & Joshua Aizenman, 1998. "Contagion and Volatility with Imperfect Credit Markets," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 207-235, June.
    3. Nikolay Nenovsky & E. Peev & T. Yalamov, 2003. "Banks-Firms Nexus under the Currency Board: Empirical Evidence from Bulgaria," Post-Print halshs-00259830, HAL.
    4. Marco Terrones & Luis Catão, 2000. "Determinants of Dollarization; The Banking Side," IMF Working Papers 00/146, International Monetary Fund.
    5. Sylvanus Ikhide, 2003. "Was There a Credit Crunch in Namibia Between 1996-2000?," Journal of Applied Economics, Universidad del CEMA, vol. 6, pages 269-290, November.
    6. Wu, Ying, 2005. "A modified currency board system: Theory and evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 15(4), pages 353-367, October.
    7. Nada Oulidi & Laurence Allain, 2009. "Credit Market in Morocco; A Disequilibrium Approach," IMF Working Papers 09/53, International Monetary Fund.
    8. Vodová, Pavla, 2008. "Credit market and prediction of its future development," MPRA Paper 11904, University Library of Munich, Germany.

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