Rapid Credit Growth
Author | : Selim Elekdag |
Publisher | : International Monetary Fund |
Total Pages | : 43 |
Release | : 2011-10-01 |
ISBN-10 | : 9781463922627 |
ISBN-13 | : 1463922620 |
Rating | : 4/5 (620 Downloads) |
Download or read book Rapid Credit Growth written by Selim Elekdag and published by International Monetary Fund. This book was released on 2011-10-01 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Episodes of rapid credit growth, especially credit booms, tend to end abruptly, typically in the form of financial crises. This paper presents the findings of a comprehensive event study focusing on 99 credit booms. Loose monetary policy stances seem to have contributed to the build-up of credit booms across both advanced and emerging economies. In particular, domestic policy rates were below trend during the pre-peak phase of credit booms and likely fuelled macroeconomic and financial imbalances. For emerging economies, while credit booms are associated with episodes of large capital inflows, international interest rates (a proxy for global liquidity) are virtually flat during these periods. Therefore, although external factors such as global liquidity conditions matter, and possibly increasingly so over time, domestic factors (especially monetary policy) also appear to be important drivers of real credit growth across emerging economies.