Skewed Credit and Growth Dynamics after the Global Financial Crisis
Estrada, Gemma; Erce, Aitor; Park, Donghyun; Rojas, Juan | October 2018
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.
Citation
Estrada, Gemma; Erce, Aitor; Park, Donghyun; Rojas, Juan. 2018. Skewed Credit and Growth Dynamics after the Global Financial Crisis. © Asian Development Bank. http://hdl.handle.net/11540/8806. License: CC BY 3.0 IGO.ISSN
2313-6537 (print)
2313-6545 (electronic)
Keywords
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Foreign and Domestic Financing
Foreign Direct Investment
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Business Financing
Investment Requirements
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
Investment Requirements
Banks
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Financial crisis
Credit control
Credit allocation
Capital market
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