Credit Reversals

Francisco Vazquez

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies episodes in which aggregate bank credit contracts alongside expanding economic activity—credit reversals. Using data for 179 countries during 1960‒2017, the paper finds that reversals are a relatively common phenomenon--on average, they occur every five years. By comparison, banking crises take place every eight years on average. Credit reversals and banking crises also appear related to each other: reversals become more likely in the aftermath of banking crises, while the likelihood of crises drops following reversals. Reversals are shown to be very costly in terms of foregone economic activity—about two-thirds of the costs of banking crises, after taking into account their relative frequencies.

Keywords: Credit reversals; credit booms; credit crunches; credit cycles; banking crises; financial stability (search for similar items in EconPapers)
JEL-codes: E32 E44 E51 G01 G21 (search for similar items in EconPapers)
Date: 2020-12-21
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-his and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/104869/1/MPRA_paper_104869.pdf original version (application/pdf)

Related works:
Working Paper: Credit Reversals (2021)
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:pra:mprapa:104869

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().