Research has shown that when banks are distressed frictions in credit provision have negative real effects;10 in countries that have well-developed markets, firms can borrow by issuing securities when banks tighten credit supply conditions.11 On the other hand, banks can smooth temporary shocks affecting borrowers and somewhat shield them from financial market shocks by supporting financial flows, as suggested by the evidence from studies using microeconomic data on bank-firm relationships.12 Cross-country evidence on various stages of the recent financial crisis has  8  9  10  11 12  R. Levine, “Bank-Based or Market-Based Financial Systems: Which is Better?,” Journal of Financial Intermediation 11 (4), 2002; for a review of the finance and growth literature see R. Levine, “Finance and Growth: Theory and Evidence,” Handbook of Economic Growth Vol.
We expect these efforts to lead to the conclusion of an arrangement with the IMF as an additional guarantee to investors that Serbia is implementing a responsible and sustainable economic policy. This would help Serbia to adjust to changes in the international environment at the lowest cost and to become more resistant to potential external shocks.