Credit Cyclicality in Chile: A Cross-Country Analysis

March 1, 2008

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Format: Chicago

Ludvig Söderling. Credit Cyclicality in Chile: A Cross-Country Analysis, (USA: International Monetary Fund, 2008) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the determinants of credit cyclicality. It constructs a financial development index and studies whether it affects the amplitude of impulse responses to shocks to output, terms of trade, global liquidity, and global risk appetite. The paper uses both country-specific VARs for cross-country analyses and panel VARs to compare impulse responses between various country groupings. The study finds evidence that financial development-especially stronger creditor rights-can mitigate credit cyclicality, given that the response of credit to output or terms of trade shocks is stronger in countries with weaker financial systems.

Subject: Consumer credit, Credit, Financial frictions, Financial sector development, Terms of trade

Keywords: Chile, Lender, Market, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/055
Stock No:

WPIEA2008055
ISBN:

9781451869170
ISSN:

1018-5941

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