Credit Reallocation, Deleveraging, and Financial Crises

Junghwan Hyun, Raoul Minetti

Research output: Contribution to journalArticlepeer-review

5 Scopus citations

Abstract

This paper studies how the process of reallocation of credit across firms behaves before and after financial crises. Applying the methodology typically used for measuring job reallocation, we track credit reallocation across Korean firms for over three decades (1980–2012). The credit boom preceding the 1997 crisis featured a slowdown of credit reallocation. After the crisis and the associated reforms, the creditless recovery (deleveraging) masked a dramatic intensification and increased procyclicality of credit reallocation. The findings suggest that the intensification of reallocation was efficiency-enhancing.

Original languageEnglish
Pages (from-to)1889-1921
Number of pages33
JournalJournal of Money, Credit and Banking
Volume51
Issue number7
DOIs
StatePublished - 1 Oct 2019

Keywords

  • credit growth
  • credit reallocation
  • E44
  • financial crises

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