Funding vs. Real Economy Shock : The Impact of the 2007-2009 Crisis on Small Firms' Credit Availability
This paper analyzes the impact of two distinct shocks stemming from the cross-border transmission of the 2007-2009 crisis on credit availability for small firms. The paper uses data from AccessBank Azerbaijan which was affected in its liquidity pos...
| Main Authors: | , |
|---|---|
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2012/04/16212275/funding-vs-real-economy-shock-impact-2007-2009-crisis-small-firms -credit-availability http://hdl.handle.net/10986/6032 |
| Summary: | This paper analyzes the impact of two
distinct shocks stemming from the cross-border transmission
of the 2007-2009 crisis on credit availability for small
firms. The paper uses data from AccessBank Azerbaijan which
was affected in its liquidity position during the second and
third quarters of 2008 by delays in its refinancing. The
Azeri real economy was hit by the global crisis from the
fourth quarter of 2008 onwards with a combined decline in
oil prices, exports, remittances, and domestic demand.
Therefore, a pure supply side shock con be contrasted with a
real economy shock that hit exactly when the bank's
funding position strengthened again. The paper finds that
during the funding shock (potential) borrowers are
discouraged from applying for loans. However, for those
applications made, the likelihood of loan approval is not
affected. The real economy shock, in contrast, reduces the
approval likelihood for SME loans in particular, while agro
and micro loans are considerably less affected. Finally,
bank relationships increase credit availability in good as
well as in bad times. |
|---|