An Open Economy Model of the Credit Channel Applied to Four Asian Economies

Spiros Bougheas, Paul Mizen and Cihan Yalcin

No 82007, Working Papers from Hong Kong Institute for Monetary Research

Abstract: This paper provides a theoretical model of an open economy credit channel including currency mismatch and financial fragility where exporting firms have access to international credit but non-exporting firms do not. It considers the post-crisis outcome which is predicted to be dramatically different for exporters/ non-exporters. We examine firms' access to external finance in four Asian economies after 1997 using a large panel of balance sheet data. Our paper demonstrates that firm heterogeneity is critical to understanding the open economy credit channel effects post-crisis since smaller and less profitable firms are indeed less likely to obtain credit than larger, export-oriented firms.

Keywords: Credit Channel; External Finance; Asian Crisis (search for similar items in EconPapers)
JEL-codes: E32 E44 E51 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-04
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-sea
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Working Paper: An Open Economy Model of the Credit Channel Applied to Four Asian Economies (2007)
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