The Credit Crunch in East Asia: What Can Bank Excess Liquid Assets Tell Us?

32 Pages Posted: 12 Oct 2000 Last revised: 13 Dec 2004

See all articles by Pierre-Richard Agenor

Pierre-Richard Agenor

University of Manchester - School of Social Sciences

Joshua Aizenman

National Bureau of Economic Research (NBER)

Alexander W. Hoffmaister

International Monetary Fund (IMF) - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: October 2000

Abstract

The paper proposes a two-step approach to assessing the extent to which the fall in credit in crisis-stricken East Asian countries was a supply- or demand-induced phenomenon. The first step is based on the estimation of a demand function for excess liquid assets by commercial banks. Such a function is derived analytically in the first part of the paper. The second step consists in establishing dynamic projections for the periods following the crisis and assessing whether or not residuals are large enough to be viewed as indicators of involuntary' accumulation of excess reserves. Results for Thailand indicate that the contraction in bank lending that accompanied the crisis was the result of supply factors.

Suggested Citation

Agenor, Pierre-Richard and Aizenman, Joshua and Hoffmaister, Alexander W., The Credit Crunch in East Asia: What Can Bank Excess Liquid Assets Tell Us? (October 2000). NBER Working Paper No. w7951. Available at SSRN: https://ssrn.com/abstract=245730

Pierre-Richard Agenor (Contact Author)

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Joshua Aizenman

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Alexander W. Hoffmaister

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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