Financial Crisis and Credit Crunch as a Result of Inefficient Financial Intermediation—with Reference to the Asian Financial Crisis
Author | : Zhaohui Chen |
Publisher | : International Monetary Fund |
Total Pages | : 25 |
Release | : 1998-09-01 |
ISBN-10 | : 9781451935998 |
ISBN-13 | : 1451935994 |
Rating | : 4/5 (994 Downloads) |
Download or read book Financial Crisis and Credit Crunch as a Result of Inefficient Financial Intermediation—with Reference to the Asian Financial Crisis written by Zhaohui Chen and published by International Monetary Fund. This book was released on 1998-09-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a model of private debt financing under inefficient financial intermediation. It suggests a mechanism that can generate the following sequence of events observed in the recent Asian crisis: A period of relatively low capital flow despite a steady improvement in economic fundamentals (capital inflow inertia), followed by a fast buildup of capital inflow, and ended with a large capital outflow and domestic credit crunch. Unlike other models requiring large movements in fundamentals or asset prices to explain a financial crisis, this model can exhibit large credit/capital flow swings with moderate changes in the economic and market environment.