Rapid credit growth and international credit: Challenges for Asia
Stefan Avdjiev,
Robert McCauley and
Patrick McGuire
No 377, BIS Working Papers from Bank for International Settlements
Abstract:
Very low interest rates in major currencies have raised concerns over international credit flows to robustly growing economies in Asia. This paper examines three components of international credit and highlights several of the policy challenges that arise in constraining such credit. Our empirical findings suggest that international credit enables domestic credit booms in emerging markets. Furthermore, we demonstrate that higher levels of international credit on the eve of a crisis are associated with larger subsequent contractions in overall credit and real output. In Asia today, international credit generally is small in relation to overall credit - as was not the case before the Asian crisis. So even though dollar credit is growing very rapidly in some Asian economies, its contribution to overall credit growth has been modest outside the more dollarised economies of Asia.
Keywords: international credit; credit booms; cross-border lending; emerging markets (search for similar items in EconPapers)
Pages: 28 pages
Date: 2012-04
New Economics Papers: this item is included in nep-ban, nep-cba, nep-ifn and nep-opm
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Citations: View citations in EconPapers (63)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:377
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