Economics at your fingertips  

Lending Booms: Latin America and the World

Pierre-Olivier Gourinchas (), Rodrigo Valdés () and Oscar Landerretche ()

Economía Journal, 2001, vol. Volume 1 Number 2, issue Spring 2001, 47-100

Abstract: Recent theories of crisis put lending booms at the root of financial collapses. Yet lending booms may be a natural consequence of economic development and fluctuations. So are lending booms dangerous? In this paper, we investigate empirically this question using a broad sample of lending boom episodes over 40 years, with a special eye for Latin America. Our results indicate that (1) lending booms are often associated with (i) a domestic investment boom; (ii) an increase in domestic interest rates; (iii) a worsening of the current account; (iv) a declines in reserves; (v) a real appreciation; (vi) a decline in output growth, (2) 'typical' lending booms do not increase substantially the vulnerability of the banking sector or the balance of payments. Comparing Latin America and the rest of the world, we find that Latin America lending booms make the economy considerably more volatile and vulnerable to financial and balance of payment crisis.

Keywords: Balance-of-payment crises; banking crisis; credit boom; lending boom; macroeconomic performance; Latin America (search for similar items in EconPapers)
Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (164) Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: Lending Booms: Latin America and the World (2001) Downloads
Working Paper: Lending Booms: Latin America and the World (2001) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in Economía Journal from The Latin American and Caribbean Economic Association - LACEA
Bibliographic data for series maintained by LACEA ().

Page updated 2019-09-13
Handle: RePEc:col:000425:008707