Is There a Credit Crunch in the Czech Republic?

Lucie Režňáková and Svatopluk Kapounek
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Lucie Režňáková: Department of Finance, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2015, vol. 63, issue 3, 995-1003

Abstract: We apply a disequilibrium model of credit demand and supply to test the credit crunch hypothesis. We suppose that firms face credit rationing and a realised outstanding loan will be the minimum desired level of commercial bank loans and bank limit for the firm. We adopted the disequilibrium model which consists of credit supply and credit demand equations. We suggest that actual observed credit growth rate at time t lies on the supply curve (excess demand), or on the demand curve (excess supply), or on both (equilibrium). Our model is estimated by the full-information maximum likelihood approach with a numerical maximization of the likelihood function. Our basic findings show that significant decrease in credits after the financial crisis in the year 2007 was caused by low economic and investment activity and reject the hypothesis that there is a credit crunch in the Czech Republic.

Keywords: money supply; money demand; maximum likelihood approach; credit; financial crisis; credit crunch; disequilibrium (search for similar items in EconPapers)
Date: 2015
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Related works:
Working Paper: Is There a Credit Crunch in the Czech Republic? (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:mup:actaun:actaun_2015063030995

DOI: 10.11118/actaun201563030995

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