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Credit Rationing as Another Cause of Financial Crisis:Evidence from Thailand |
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| รหัสดีโอไอ | |
| Creator | Pungpond Rukumnuaykit |
| Title | Credit Rationing as Another Cause of Financial Crisis:Evidence from Thailand |
| Publisher | School of Development Economic |
| Publication Year | 2550 |
| Journal Title | Development Economic Review |
| Journal Vol. | 2 |
| Journal No. | 2 |
| Page no. | 1 |
| Keyword | Credit Rationing, Small Farm Agriculture, Capital Control, Financial Crisis. |
| ISSN | 1906-2540 |
| Abstract | This paper examines the credit market to determine whether slow growth was caused by problems in credit markets as many scholars have suggested. In particular, the question of how a rise in interest rates affects behaviors of the banks and the firms, and how and to what extent credit restriction affects sales and growth were investigated. The model developed in the paper suggests that when loan terms are not restricted, lenders will statistically discriminate against small firms. In other words lenders will charge small firms higher interest rates. When loan contract terms are restricted, lenders might ration credit buy not lending to small firms that have higher risks. However, when interest rates are high, large firms might self-select out of the loan markets because they have other alternatives to cope with credit problem. The analysis from Thai data during the financial crisis reveals that Thailand faced mild credit rationing problems before the crises. The problem became stronger, but not severe, during the crises. Trade credit-borrowing ratio and the results from our regression equation suggest that the self-selection problem was more pronounced during the crises. However, even though problems of credit rationing and adverse selection did occur, the importance of trade credits and borrowing on sales declined during the crises. |
