Credit Expansion in Emerging Markets: Propeller of Growth?

September 29, 2015

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Format: Chicago

Mercedes Garcia-Escribano, and Fei Han. Credit Expansion in Emerging Markets: Propeller of Growth?, (USA: International Monetary Fund, 2015) accessed December 26, 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 explores the contribution of credit growth and the composition of credit portfolio (corporate, consumer, and housing credit) to economic growth in emerging market economies (EMs). Using cross-country panel regressions, we find significant impact of credit growth on real GDP growth, with the magnitude and transmission channel of the impact of credit on real activity depending on the specific type of credit. In particular, the results show that corporate credit shocks influence GDP growth mainly through investment, while consumer credit shocks are associated with private consumption. In addition, taking Brazil as a case study, we use a time series model to examine the role that the expansion and composition of credit played in driving real GDP growth in the past. The results of the case study are consistent with those found in the cross-country panel regressions.

Subject: Consumer credit, Consumption, Credit, Credit booms, Money, National accounts, Private consumption

Keywords: Consumer credit, Consumption, Credit, Credit booms, Credit growth, Credit portfolio, Credit shock, Credit variable, Economic Growth, Emerging Markets, Global, Growth matter, Housing credit, Private consumption, Time series, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/212
Stock No:

WPIEA2015212
ISBN:

9781513581927
ISSN:

1018-5941

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