Skewed Credit and Growth Dynamics after the Global Financial Crisis

Gemma Estrada (), Aitor Erce, Donghyun Park and Juan Rojas

No 562, ADB Economics Working Paper Series from Asian Development Bank

Abstract: A large empirical literature finds that financial development is beneficial for economic growth, although some recent evidence suggests otherwise. We contribute to the finance–growth literature by examining the role of credit growth skewness and long-run growth. Earlier literature found that credit growth skewness is negatively associated with economic growth. We revisit this relationship using a large and recent panel dataset that encompasses Organisation for Economic Co-operation and Development economies and the impact of the global financial crisis. While our results reconfirm an association between credit skewness and growth, the relationship is more nuanced than previously thought. We find that the beneficial effects from lower skewness—systemic financial risks—were evident only prior to 2000. Our findings help explain why boom–bust dynamics were positively associated with economic growth in emerging markets in the past and why the growth of advanced economies has been sluggish since the global financial crisis.

Keywords: credit dynamics; economic growth; skewness (search for similar items in EconPapers)
JEL-codes: F34 F36 F43 O41 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2018-10-16
New Economics Papers: this item is included in nep-fdg and nep-opm
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Working Paper: Skewed Credit and Growth Dynamics after the Global Financial Crisis (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0562

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