Electronic Resource
Oxford, UK and Boston, USA
:
Blackwell Publishers Ltd.
Review of international economics
10 (2002), S. 0
ISSN:
1467-9396
Source:
Blackwell Publishing Journal Backfiles 1879-2005
Topics:
Economics
Notes:
The paper develops a new model of private debt financing with an inefficient financial system at its core, where inefficiency is characterized by costly loan monitoring. The model suggests a mechanism that generates the following series of events: a period of low capital inflow despite high rates of economic growth (capital inflow inertia), as observed in the take-off era in the Asian tiger economies; followed by a sudden acceleration of capital inflow (as seen in the 1990s); and then by a crisis, which is defined as a large reduction in the amount of loans intermediated by the financial system (i.e., a large capital outflow or credit crunch). Under certain conditions, financial crisis can occur even when economic fundamentals and market sentiment change only slightly. Unlike most credit rationing models, the results presented here do not hinge on the assumption of asymmetric information. The model also provides guidance about the appropriate policy responses to an imminent crisis.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1111/1467-9396.00317
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