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This paper estimates a disequilibrium model of credit supply and demand to evaluate whether there was a credit crunch in Finland following the banking crisis of 1991-92. Empirical analysis suggests that the marked reduction in bank lending was mainly in reaction to a cyclical decline in credit demand, likely exacerbated by the high level of indebtedness of the borrowers. It also appears that banks became less willing to supply credit during periods associated with a deterioration in asset quality, and reduced profits due to declining regulatory protection from competition, and a need to increase capital adequacy levels.

Banks and Banking --- Money and Monetary Policy --- Industries: Financial Services --- Financial Markets and the Macroeconomy --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Financing Policy --- Financial Risk and Risk Management --- Capital and Ownership Structure --- Value of Firms --- Goodwill --- Financial Crises --- Monetary economics --- Banking --- Finance --- Financial services law & regulation --- Economic & financial crises & disasters --- Credit --- Bank credit --- Loans --- Credit risk --- Money --- Financial institutions --- Financial regulation and supervision --- Banking crises --- Financial crises --- Banks and banking --- Financial risk management --- Finland