Credit Reallocation, Deleveraging, and Financial Crises

Junghwan Hyun and Raoul Minetti

Journal of Money, Credit and Banking, 2019, vol. 51, issue 7, 1889-1921

Abstract: This paper studies how the process of reallocation of credit across firms behaves before and after financial crises. Applying the methodology typically used for measuring job reallocation, we track credit reallocation across Korean firms for over three decades (1980–2012). The credit boom preceding the 1997 crisis featured a slowdown of credit reallocation. After the crisis and the associated reforms, the creditless recovery (deleveraging) masked a dramatic intensification and increased procyclicality of credit reallocation. The findings suggest that the intensification of reallocation was efficiency‐enhancing.

Date: 2019
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https://doi.org/10.1111/jmcb.12575

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:51:y:2019:i:7:p:1889-1921

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