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An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data
Author: Mr. Marco Terrones and Mr. Enrique G. Mendoza
Series:
IMF Working Papers
Volume/Issue:
Volume 2008: Issue 226
Language:
English
Publication Date:
01 Sep 2008
DOI:
https://doi.org/10.5089/9781451870848.001
ISBN:
9781451870848
ISSN:
1018-5941
Pages:
50
Keywords:
WP; credit boom; business cycle; credit transmission channel; credit-GDP ratio; credit boom event; credit booms in Chile; credit expansion; credit issuance; credit transmission mechanisms; current account; dynamics of macro; private sector
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund