Is There a Credit Crunch in the Czech Republic?

Lucie Reznakova () and Svatopluk Kapounek
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Lucie Reznakova: Department of Finance, Faculty of Business and Economics, Mendel University in Brno

No 2014-50, MENDELU Working Papers in Business and Economics from Mendel University in Brno, Faculty of Business and Economics

Abstract: We apply a disequilibrium model of credit demand and supply to test the credit crunch hy- pothesis. 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 sug- gest 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 like- lihood 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 hy- pothesis 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)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 15
Date: 2014-10
New Economics Papers: this item is included in nep-ban and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Is There a Credit Crunch in the Czech Republic? (2015)
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