Increasing Wealth and Increasing Instability: The Role of Collateral

Charles Ka Yui Leung () and Chung-Yi Tse ()

Working Papers from Stanford - Hoover Institution

Abstract: History repeats the same story about financial crises every few years. High growth in domestic credit almost always guarantee the outbreak of a crisis. In normal times, growth in credit is generally associated with faster long run growth, however, as financial intermediation improves the efficiency of channeling capital to productive investment. We present an endogenous growth model to reconcile the two seemingly contradictory stylized facts.

Keywords: GROWTH RATE; FINANCIAL ASPECTS; ECONOMIC DEVELOPMENT (search for similar items in EconPapers)
JEL-codes: E32 O16 O41 O53 (search for similar items in EconPapers)
Date: 2001

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Journal Article: Increasing Wealth and Increasing Instability: The Role of Collateral (2002)
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