Creditor Protection and Credit Response to Shocks

Posted: 16 Jun 2008

See all articles by Arturo José Galindo

Arturo José Galindo

affiliation not provided to SSRN

Alejandro Micco

University of Chile

Date Written: 2007

Abstract

This article studies the relationship between creditor protection and credit responses to macroeconomic shocks. Using a data set on legal determinants of finance in a panel of data on aggregate credit growth for 79 countries during 1990-2004, it is shown that credit is more responsive to external shocks in countries with weak legal creditor protection and weak enforcement. The results are statistically and economically significant and robust to alternative measures of creditor protection, to the inclusion of variables that reflect different stages of economic development, to the restriction of the sample to only developing economies, to the controls for systemic crises, to alternative shock measures, and to vector autoregressive specifications.

Keywords: G31, G33, K2

Suggested Citation

Galindo, Arturo José and Micco, Alejandro, Creditor Protection and Credit Response to Shocks (2007). The World Bank Economic Review, Vol. 21, Issue 3, pp. 413-438, 2007. Available at SSRN: https://ssrn.com/abstract=1146049 or http://dx.doi.org/lhm016

Arturo José Galindo (Contact Author)

affiliation not provided to SSRN

No Address Available

Alejandro Micco

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

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