EconPapers    
Economics at your fingertips  
 

Bank Wholesale Funding and Credit Procyclicality:Evidence from Korea

Sangjun Jeong () and Hueechae Jung ()
Additional contact information
Hueechae Jung: Monetary Policy and Markets Department, Bank of Korea, Korea

Panoeconomicus, 2013, vol. 60, issue 5, 615-631

Abstract: Credit procyclicality has recently been the focus of considerable attention, but what fuels the often excessive credit growth is rarely questioned. We investigate the relationship between the composition of banks’ liabilities and their credit procyclicality. After examining the macroeconomic context where banks rely increasingly on wholesale funding (WSF), we estimate the effect of WSF on the banks’ credit growth using quarterly panel data for the commercial banks of Korea from 2000 to 2011. We find that a higher sensitivity of banks’ WSF to the business cycle leads to an excessive response of credit growth to the business cycle, even with a low share of WSF on bank liabilities. On the other hand, we find that overseas WSF has a more marked effect on credit procyclicality, which may additionally exacerbate the financial fragility of export-led emerging economies.

Keywords: Credit procyclicality; Wholesale funding; Financial fragility (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.panoeconomicus.rs/casopis/2013_5/03%20S ... 0Hueechae%20Jung.pdf (application/pdf)

Related works:
Working Paper: Banks' wholesale funding and credit procyclicality: evidence from Korea (2011) 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: https://EconPapers.repec.org/RePEc:voj:journl:v:60:y:2013:i:5:p:615-631

Access Statistics for this article

Panoeconomicus is currently edited by Kosta Josifidis

More articles in Panoeconomicus from Savez ekonomista Vojvodine, Novi Sad, Serbia
Bibliographic data for series maintained by Ivana Horvat ( this e-mail address is bad, please contact ).

 
Page updated 2021-07-22
Handle: RePEc:voj:journl:v:60:y:2013:i:5:p:615-631