Riding the Wave of Credit: Are Longer Expansions Really a Bad Omen?

Open Economies Review - Tập 31 Số 4 - Trang 729-751 - 2020
Vı́tor Castro1, Rodrigo Martins2
1School of Business and Economics, Loughborough University, Loughborough, Leicestershire, LE11 3TU, UK
2Faculty of Economics, University of Coimbra, Av. Dias da Silva, 165, 3004-512 Coimbra, Portugal

Tóm tắt

AbstractSome studies argue that credit booms that end up in banking crises are usually longer than those that end without creating havoc. However, they do not test this hypothesis empirically. This paper employs a duration model to assess the relationship between the length of credit booms and their outcome. The empirical analysis shows that credit expansions that end in banking crisis are indeed more prone to last longer than those that end softly. Furthermore, differences in length patterns are found to start in the build-up phase, extending to the unwinding phase of credit cycles.

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Open Economies Review

Tập 31 Số 4

729-751

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