Credit Cycles and Business Cycles in Twenty EU Economies

Apostoaie, Marius Constantin; Percic, Stanislav

doi:10.1016/s2212-5671(14)00669-8

Cited by 13 publications

(5 citation statements)

References 13 publications

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“…Claessens et al (2012) show that the rapid credit growth tends to amplify the economic expansions. Apostoaie and Percic (2014) confirm a positive relation between the credit cycle and the business cycle in the 12 European countries. Credit risk of banks is linked to the phase of the business cycle (Bikker & Metzemakers, 2005).…”

Section: Literature Reviewsupporting

confidence: 55%

Financial Development, Business Cycle and Bank Risk in Southeast Asian Countries

Son¹,

Nguyen²

2020

JAFEB

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The paper aims to examine whether business cycles affect the link between financial development and bank risk, measured by Zscore and nonperforming loans to total loans in six Southeast Asian countries, namely Indonesia, Philippines, Malaysia, Singapore, Thailand and Vietnam. This study uses a sample of 95 listed commercial banks over a 15-year period between 2004 and 2018 in the six Southeast Asian countries. This study employs panel OLS regression and modifications to tackle issues such as endogeneity and heteroscedasticity. The results show that the impact of stock market development (the ratio of the market capitalization to GDP) on Zscore is significantly positive, whereas its effect on non-performing loans is significantly negative. The findings suggest that financial development, in terms of stock market capitalization, improves banks' Zscores and reduces their level of non-performing loans, suggesting that financial development on average reduces bank risk. The impact of business cycle is insignificant towards bank risk, thus rejecting both counter-and pro-cyclical hypotheses, except for the case of risk indicator of loan loss provisions. Examining the joint effect of the business cycle and financial development on bank risk, we find that the phase of business cycles generally does not moderate the link between financial development and bank risk.

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Section: Literature Reviewsupporting

confidence: 55%

Financial Development, Business Cycle and Bank Risk in Southeast Asian Countries

Son¹,

Nguyen²

2020

JAFEB

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“…The positive coefficient for logarithm of GDP per capita is at 1% significance, suggesting that the economic growth leads to an increase of the credit level. In other words, a high economic growth favors credit cycles in line with existing studies on the issues (Kiss et al (2006), Igan and Tan (2015), Mendoza and Terrones (2008), Chen et al (2012), Duprey (2012), Apostoaie and Percic, 2014) Note: The Granger non-causality test of Dumitrescu & Hurlin (2012) is used, H0: X does not Granger-cause Y, H1: X does Granger-cause Y for at least one panelvar (country). *, **, *** is significant levels at 10%, 5%, and 1%, respectively.…”

Section: The Global Samplementioning

confidence: 60%

Institutions, economic openness and credit cycles: An international evidence

Nguyen

Schınckus

Thanh

et al. 2020

Journal of International Studies

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This study aims at investigating the influence of institutions and economic openness on credit cycles in a global sample. Six institutional quality indicators combined with net inward FDI and trade openness are collected to estimate, respectively, the effects of institutions and economic openness on credit cycles. Our panel data covers 60 economies, including 32 low-and middle-income economies (LMEs) and 28 high-income economies (HIEs), the data ranging between 2003 and 2017. Although better institutions tend to stimulate credit growth, they significantly stabilize credit cycles. These findings are documented with significant results in LMEs while it is less obvious in HIEs.

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“…Thus, SMEs in these countries face higher interest rates, larger credit constraints and higher costs of switching across banks, implying that they are also more likely to benefit from positive credit supply shocks. Hence, using a similar empirical strategy as Greenstone et al (2019) for the case of the US, this paper studies the impact of bank-specific credit shocks on employment in a LMIE, Mexico. The relationship between credit growth and aggregate economic outcomes has been well-documented in the macro literature, in which it has been shown that these variables tend to co-move for both AEs (Apostoaie et al, 2014;Azariadis, 2018) and LMIEs (García-Escribano and Han, 2015). However, identifying a causal link between credit and these outcomes is a difficult empirical task, for obvious concerns of omitted variables and reverse causality.…”

Section: Introductionmentioning

confidence: 93%

Do Credit Supply Shocks Affect Employment in Middle-Income Countries?

2021

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The authors thank Everardo Tellez de la Vega and Renato Yslas for outstanding research assistance. This research was produced during the time Gutierrez was Financial Researcher at Bank of Mexico during 2019-2020. Banco de México shall have no liability to any person for any errors or omissions in any of the data, charts or information contained within this paper or for any actions taken in reliance on the same, which are entirely at the risk of the reader.

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Credit Cycles and Business Cycles in Twenty EU Economies

Cited by 13 publications

References 13 publications

Financial Development, Business Cycle and Bank Risk in Southeast Asian Countries

Financial Development, Business Cycle and Bank Risk in Southeast Asian Countries

Institutions, economic openness and credit cycles: An international evidence

Do Credit Supply Shocks Affect Employment in Middle-Income Countries?

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