Further Evidence on the Credit View: The Case of Finland

Posted: 20 Mar 2003

See all articles by Ali Anari

Ali Anari

Texas A&M University - Mays Business School

James W. Kolari

Texas A&M University - Department of Finance

Seppo Pynnonen

University of Vaasa, Department of Mathematics and Statistics

Antti Suvanto

Bank of Finland

Abstract

The credit view asserts that there is a positive relationship between credit availability and economic growth. This paper applies recent advances in time series analysis to investigate the role of credit availability on the Finnish economy in the 1980-1996 period. During this period the Finnish economy experienced rapid economic growth followed by a deep recession associated with a widespread banking crisis. Based on monthly time series of GDP, money supply, consumer prices, bank credit, and export data, vector autoregression results indicate that credit availability played an important role in the expansion of the Finnish economy in the early 1980's as well as its later contraction. The impact of credit availability on the Finnish aggregate was smaller than money supply but larger than prices. The paper concludes that the credit availability had a pervasive influence on the Finnish economy and that Government intervention in Finland played a major role in limiting adverse credit effects on the economy.

Suggested Citation

Anari, Ali and Kolari, James W. and Pynnonen, Seppo and Suvanto, Antti, Further Evidence on the Credit View: The Case of Finland. Journal of Applied Economics, Vol. 34, pp. 267-278, 2002. Available at SSRN: https://ssrn.com/abstract=297054

Ali Anari (Contact Author)

Texas A&M University - Mays Business School ( email )

Wehner 401Q, MS 4353
College Station, TX 77843-4218
United States
979-845-2094 (Phone)
979-845-0460 (Fax)

James W. Kolari

Texas A&M University - Department of Finance ( email )

MS-4218
Department of Finance
College Station, TX TX 77843-4218
United States
979-845-4803 (Phone)
979-845-3884 (Fax)

Seppo Pynnonen

University of Vaasa, Department of Mathematics and Statistics ( email )

Wolffintie 34
65200 Vaasa
Finland
+358-21-449 8311 (Phone)

HOME PAGE: http://www.uva.fi/~sjp/

Antti Suvanto

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

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