Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153792
Authors: 
Bijsterbosch, Martin
Dahlhaus, Tatjana
Year of Publication: 
2011
Series/Report no.: 
ECB Working Paper 1358
Abstract: 
This paper aims to shed light on the characteristics and particularly the determinants of credit-less recoveries. After building a dataset and documenting some stylised facts of credit-less recoveries in emerging market economies, this paper uses panel probit models to analyse key determinants of credit-less recoveries. Our main findings are the following. First, our frequency analysis confirms earlier findings that credit-less recoveries are not at all rare events. Moreover, our analysis shows that the frequency of credit-less recoveries doubles after a banking or currency crisis. Second, results from estimated panel probit models suggest that credit-less recoveries are typically preceded by large declines in economic activity and financial stress, in particular if private sector indebtedness is high and the country is reliant on foreign capital inflows. Finally, we find that the predicted probability of a credit-less recovery in central and eastern European EU Member States during the coming years varies across countries, but is relatively high in the Baltic States.
Subjects: 
Credit-less Recoveries
Financial crises
Panel Probit Models
JEL: 
C23
C25
E32
E51
G01
Document Type: 
Working Paper

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