Creditless Recoveries

By Abdul d Abiad, Giovanni Dell'Ariccia, Grace B Li

March 1, 2011

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Format: Chicago

Abdul d Abiad, Giovanni Dell'Ariccia, and Grace B Li. Creditless Recoveries, (USA: International Monetary Fund, 2011) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Banking crises, Credit, Credit booms, Financial crises, Production growth

Keywords: Banking crisis, Dummy variable, WP

Publication Details

Pages:

30
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/058
Stock No:

WPIEA2011058
ISBN:

9781455221028
ISSN:

1018-5941

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