› › Do Credit Shocks Matter

Do Credit Shocks Matter? A Global Perspective

Author : Mr.Ayhan Kose

Publisher : International Monetary Fund

Page : 39 pages

File Size : 46,60 MB

Release : 2010-11-01

Category : Business & Economics

ISBN : 1455209619

Get eBook

Book Description

This paper examines the importance of credit market shocks in driving global business cycles over the period 1988:1-2009:4. We first estimate common components in various macroeconomic and financial variables of the G-7 countries. We then evaluate the role played by credit market shocks using a series of VAR models. Our findings suggest that these shocks have been influential in driving global activity during the latest global recession. Credit shocks originating in the United States also have a significant impact on the evolution of world growth during global recessions.



Credit Supply and Productivity Growth

Author : Francesco Manaresi

Publisher : International Monetary Fund

Page : 75 pages

File Size : 22,86 MB

Release : 2019-05-17

Category : Business & Economics

ISBN : 1498315917

Get eBook

Book Description

We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP.



Credit Expansion in Emerging Markets

Author : Ms.Mercedes Garcia-Escribano

Publisher : International Monetary Fund

Page : 24 pages

File Size : 22,42 MB

Release : 2015-09-29

Category : Business & Economics

ISBN : 1513581929

Get eBook

Book Description

This paper explores the contribution of credit growth and the composition of credit portfolio (corporate, consumer, and housing credit) to economic growth in emerging market economies (EMs). Using cross-country panel regressions, we find significant impact of credit growth on real GDP growth, with the magnitude and transmission channel of the impact of credit on real activity depending on the specific type of credit. In particular, the results show that corporate credit shocks influence GDP growth mainly through investment, while consumer credit shocks are associated with private consumption. In addition, taking Brazil as a case study, we use a time series model to examine the role that the expansion and composition of credit played in driving real GDP growth in the past. The results of the case study are consistent with those found in the cross-country panel regressions.



The Future of Europe

Author : Alberto Alesina

Publisher : Mit Press

Page : 186 pages

File Size : 29,98 MB

Release : 2008

Category : Business & Economics

ISBN : 9780262512046

Get eBook

Book Description

Presenting the argument which suggests that, unless Europe takes serious action soon, its economic and political decline is unavoidable, this text provides a statement of the steps Europe must take before it's too late.



What Happens During Recessions, Crunches and Busts?

Author : Mr.Ayhan Kose

Publisher : International Monetary Fund

Page : 77 pages

File Size : 47,91 MB

Release : 2008-12-01

Category : Business & Economics

ISBN : 1451871325

Get eBook

Book Description

We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the period 1960–2007. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of recessions. Specifically, we find evidence that recessions associated with credit crunches and house price busts tend to be deeper and longer than other recessions. JEL Classification Numbers: E32; E44; E51; F42



Financial Crises Explanations, Types, and Implications

Author : Mr.Stijn Claessens

Publisher : International Monetary Fund

Page : 66 pages

File Size : 13,82 MB

Release : 2013-01-30

Category : Business & Economics

ISBN : 1475561008

Get eBook

Book Description

This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.



Household Leverage and the Recession

Author : Callum Jones

Publisher : International Monetary Fund

Page : 51 pages

File Size : 20,75 MB

Release : 2018-08-30

Category : Business & Economics

ISBN : 1484374983

Get eBook

Book Description

We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40 percent of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.



Banks, Government Bonds, and Default

Author : Nicola Gennaioli

Publisher : International Monetary Fund

Page : 53 pages

File Size : 11,12 MB

Release : 2014-07-08

Category : Business & Economics

ISBN : 1498391990

Get eBook

Book Description

We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries. During sovereign defaults, banks increase their exposure to public bonds, especially large banks and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults. This correlation is mostly due to bonds acquired in pre-default years. These findings shed light on alternative theories of the sovereign default-banking crisis nexus.



A Decade after the Global Recession

Author : M. Ayhan Kose

Publisher : World Bank Publications

Page : 475 pages

File Size : 38,42 MB

Release : 2021-03-19

Category : Business & Economics

ISBN : 1464815283

Get eBook

Book Description

This year marks the tenth anniversary of the 2009 global recession. Most emerging market and developing economies weathered the global recession relatively well, in part by using the sizable fiscal and monetary policy ammunition accumulated during prior years of strong growth. However, their growth prospects have weakened since then, and many now have less policy space. This study provides the first comprehensive stocktaking of the past decade from the perspective of emerging market and developing economies. Many of these economies have now become more vulnerable to economic shocks. The study discusses lessons from the global recession and policy options for these economies to strengthen growth and prepare for the possibility of another global downturn.



How Do Public Debt Cycles Interact with Financial Cycles?

Author : Mr.Tigran Poghosyan

Publisher : International Monetary Fund

Page : 33 pages

File Size : 38,82 MB

Release : 2015-11-25

Category : Business & Economics

ISBN : 1513501569

Get eBook

Book Description

We employ a duration model to study determinants of public debt cycles in 57 advanced and emerging economies over the 1960–2014 period, with a particular focus on the impact of financial cycles. The results suggest that the association between financial and debt cycles is asymmetric. Debt expansions preceded by overheating in credit and financial markets tend to last longer than other expansions, but there is no significant association between financial cycles and debt contractions. There is strong evidence of duration dependence in both phases of the cycle, with the likelihood of expansions and contractions to end increasing with the length of their respective spells. Higher initial level of debt increases the spell of contractions (persistence of adjustment effort hypothesis) and reduces the spell of expansions (debt sustainability hypothesis). This result is robust to the inclusion of global factors, openness, political stability, and debt crisis indicators as additional controls.