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

Spiros Bougheas, Paul Mizen () and Cihan YALCIN ()
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Spiros Bougheas: University of Nottingham

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)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-sea
Date: 2007-04
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Persistent link: http://EconPapers.repec.org/RePEc:hkm:wpaper:082007

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