Money Demand, Bank Credit, and Economic Performance in Former Socialist Economies

Author/Editor:

Manmohan S. Kumar ; Guillermo Calvo

Publication Date:

January 1, 1994

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines factors determining the allocation of bank credit to the enterprise sector, and the implications of this allocation for aggregate supply and macro-economic performance, in the former socialist economies. It first develops a model to explain how changes in demand for money by the household sector directly influence the availability of working capital, which in turn determines aggregate output and employment. It then examines factors influencing the allocation of bank credit between enterprises and other borrowers, in particular the government. Finally, the paper discusses relative merits of bank finance and equity capital in financing medium- and long-term investment, and constraints on the development of efficient equity markets.

Series:

Working Paper No. 1994/003

Subject:

Bank credit Banking Commercial banks Credit Demand for money Financial institutions Inflation Money Prices

Notes:

Also published in Staff Papers, Vol. 41, No. 2, June 1994.

English

Publication Date:

January 1, 1994

ISBN/ISSN:

9781451841831/1018-5941

Stock No:

WPIEA0031994

Pages:

48

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