(immediately after the inception of the crisis) to early 1998.1 By contrast, Dollar and Hallward-Driemeier (1998) found little evidence of a credit crunch in Thailand-in the sense of firms with orders but unable to get credit to finance working capital needs. The evidence that they gathered suggests, on the contrary, that constraining factors on output expansion appeared to have been weak perceived demand and the sharp increase in the price of imported inputs resulting from the large nominal exchange rate depreciation that occurred in the months following the crisis.<sup>2</sup> Along the same lines, DworFRecaut, Hallward-Driemeier, and Colaco (1999) analyzed the results of a survey conducted between November 1998 and February 1999 in Indonesia, Korea, Malaysia, the Philippines, and Thailand of 3,700 firms, covering major manufacturing and export sectors. They found that at prevailing interest rates, credit availability in the aggregate was not seen by the surveyed firms as a major constraint on production plans. They concluded therefore that the fall in credit was demand-driven.

Because survey evidence can be seriously biased-for instance, tight credit can reduce demand, and lack of demand may be perceived as the main proW lem by respondents-several other studies have relied on other methodologies. Domac and Ferri (1999b), for instance, used a conceptual framework based on the "credit view" of monetary policy to analyze the existence of a credit crunch in Indonesia, Korea, Malaysia, the Philippines, and Thailand.<sup>3</sup> 'As noted by Ito and Pereira da Silva (1999), if the nominal credit stock is deflated by a composite index consisting of consumer prices and the nominal exchange rate (in order to account for the fact that a significant share of the loans provided by Thai commercial banks and finance companies just before the crisis were denominated in foreign currency and the book value of these loans was recorded at the current exchange rate), the deceleration in the rate of growth of real credit to the private sector was quite dramatic in that country: a year-on-year contraction of -2.4 percent in August 1997, -5.3 percent in October, -12.2 percent in November and -18 percent in December (Ito and Pereira da Silva (1999, p. 14)). 21t should also be noted that in Thailand, firms had contracted large amounts of unhedged short-term debt on world capital markets and were thus highly vulnerable to currency depreciation; see Alba et al. (1999).

'As noted by Ito and Pereira da Silva (1999), if the nominal credit stock is deflated by a composite index consisting of consumer prices and the nominal exchange rate (in order to account for the fact that a significant share of the loans provided by Thai commercial banks and finance companies just before the crisis were denominated in foreign currency and the book value of these loans was recorded at the current exchange rate), the deceleration in the rate of growth of real credit to the private sector was quite dramatic in that country: a year-on-year contraction of -2.4 percent in August 1997, -5.3 percent in October, -12.2 percent in November and -18 percent in December (Ito and Pereira da Silva (1999, p. 14)).

3See Walsh (1998, Chapter 7) for a detailed discussion of the credit channel of monetary policy, particularly the role of informational asymmetries.

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