02086cas a2200253 a 4500 AALejournalIMF013154 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475580914 1018-5941 BD-DhAAL BD-DhAAL Aiyar, Shekhar. The Domestic Credit Supply Response to International Bank Deleveraging : Is Asia Different? / Shekhar Aiyar, Sonali Jain-Chandra. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (15 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students During the global financial crisis, European banks contracted foreign claims on recipient economies sharply. This paper examines the impact of that deleveraging on credit supply in recipient economies, with a particular focus on Asia. Identification is achieved by exploiting heterogeneity in ex-ante patterns of funding reliance on different European banking systems, and in variation in the ratio of local claims in local currency to total foreign claims in recipient economies. These sources of variation are used to create instruments for the deleveraging shock. We find that the contraction in European bank foreign claims was associated with a substantial reduction in domestic credit supply in a broad sample of countries. However, the credit supply response in Asia was only about half the size of the response in non-Asian countries, possibly due to a more robust policy response and healthier local bank balance sheets at the outset of the crisis. Mode of access: Internet Jain-Chandra, Sonali. IMF Working Papers; Working Paper ; No. 2012/258 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/258/001.2012.issue-258-en.xml IMF e-Library