The role of household and business credit in banking crises

Büyükkarabacak, Berrak; Valev, Neven T.

doi:10.1016/j.jbankfin.2009.11.022

Cited by 163 publications

(137 citation statements)

References 27 publications

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“…This finding is in contrast to Büyükkarabacak and Valev (2010), who only find a robust effect of household credit on crisis probabilities considering a sample of 37 developed and nondeveloped countries over the period 1990-2006. We shall later see that differences in time periods considered explains the discrepancies in results.…”

Section: Credit To Households Vs Non-financial Enterprisescontrasting

confidence: 99%

“…Our results show that they both have positive and significant effects on the likelihood of a financial crisis. This result contrasts with Büyükkarabacak and Valev (2010), who only find a robust effect of household credit considering a sample that runs through the period 1990-2006. Performing a sample split, we find that the difference in results may be ascribed to the shorter sample used in their study.…”

Section: Introductioncontrasting

confidence: 91%

“…The effect of the credit-to-GDP gap for non-financial enterprises is less robust on the post-1994 sample. This suggest that the difference in results in this paper and in Büyükkarabacak and Valev (2010), who consider a post-1990 sample, may at least partly be ascribed to the different sample periods considered. The marginal effect of the house price-to-income gap is also less stable across samples and specifications.…”

Section: Temporal Stabilitycontrasting

confidence: 69%

“…First, we found that when total private sector credit is partitioned into separate measures for households and non-financial enterprises, both exercise a positive and significant impact on the probability of a crisis. Thus, it seems important to monitor developments in both types of credit -a finding that contests previous findings (Büyükkarabacak and Valev, 2010). A second finding is that global imbalances in house prices increase the fragility of the domestic financial system.…”

Section: Resultsmentioning

confidence: 77%

“…One notable exception is Büyükkarabacak and Valev (2010), who argue that authorities should keep a close eye on expansions in household credit for two main reasons: first, because the share of household credit has increased substantially over time in most countries. Second, because growth in household credit raises debt levels without significantly affecting long-term growth prospects.…”

Section: Credit To Households Vs Non-financial Enterprisesmentioning

confidence: 99%

See 4 more Smart Citations

Bubbles and Crises: The Role of House Prices and Credit

Anundsen

Gerdrup²,

Hansen³

et al. 2014

SSRN Journal

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Section: Credit To Households Vs Non-financial Enterprisescontrasting

confidence: 99%

Section: Introductioncontrasting

confidence: 91%

Section: Temporal Stabilitycontrasting

confidence: 69%

Section: Resultsmentioning

confidence: 77%

Section: Credit To Households Vs Non-financial Enterprisesmentioning

confidence: 99%

See 3 more Smart Citations

Bubbles and Crises: The Role of House Prices and Credit

Anundsen

Gerdrup²,

Hansen³

et al. 2014

SSRN Journal

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An investigation of the effects of income inequality on financial fragility: Evidence from Organization for Economic Co‐operation and Development countries

Amountzias

2018

Int. J Fin Econ

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The main scope of the paper is to investigate the proposition that rising income inequality results in systemic financial instability in developed countries. In particular, 33 OECD (Organization for Economic Co‐operation and Development) countries are studied in a panel Vector Autoregression (VAR) framework analysis over 1995–2015. There is a growing literature on the effects of income inequality on financial crises. This study provides significant evidence in favour of a positive relationship between income inequality and financial fragility, when particular factors are controlled for. Complementary findings also suggest that (a) debt accumulation in the private sector significantly depends on credit expansion, (b) the debt levels of the private sector and households co‐move over time, and (c) financial deregulation significantly contributes to financial instability. Therefore, policymakers should take into account regulatory reforms that will promote institutional and financial innovations to restrict debt accumulation and render the financial system more robust to destabilising shocks.

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Credit information sharing and the shift in bank lending towards households

Bahadir

Valev

2019

Int. J Fin Econ

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The disproportionate increase of bank lending to households relative to businesses is a central trend in the financial sector of many countries. In this paper, we provide evidence that credit information sharing has strongly contributed to this trend. Specifically, using a sample of 25 European countries, we show that credit information sharing is associated with a significant tilt in private bank lending towards household debt. That result is robust to various estimation techniques and control variable sets, as well as to instrumental variable estimations.

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The role of household and business credit in banking crises

Cited by 163 publications

References 27 publications

Bubbles and Crises: The Role of House Prices and Credit

Bubbles and Crises: The Role of House Prices and Credit

An investigation of the effects of income inequality on financial fragility: Evidence from Organization for Economic Co‐operation and Development countries

Credit information sharing and the shift in bank lending towards households

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