Relationship Lending, Accounting Disclosure, and Credit Availability during the Asian Financial Crisis

Wenying Jiangli, Haluk Unal and Chiwon Yom

Journal of Money, Credit and Banking, 2008, vol. 40, issue 1, pages 25-55

Abstract: We examine whether lending relationships benefit firms by making credit more available during periods of financial stress. Our main finding is that during the Asian financial crisis of July 1997 through the end of 1998, relationship lending increased the likelihood that Korean and Thai firms would obtain credit but it had no effect on Indonesian and Philippine firms. We ask if accounting disclosure might explain the observed differences among the three countries for which audit information is available. We find that for Indonesian firms with weak lending relationships, banks replace relationship lending technology with a financial-statement lending technology. Such a result does not hold for Korean and Philippine firms. Copyright 2008 The Ohio State University.

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Journal of Money, Credit and Banking is edited by Pok-Sang Lam, Deborah Lucas, Masao Ogaki and Kenneth D. West

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