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An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data

Author/Editor: Mendoza, Enrique G. | Terrones, Marco
Authorized for Distribution: September 1, 2008
Electronic Access: Free Full Text (PDF file size is 3,497KB)
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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: We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
 
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Series: Working Paper No. 08/226
Subject(s): Credit expansion | Business cycles | Emerging markets | Asset prices | Current account deficits | Productivity
Author's keyword(s): credit booms; business cycles; emerging markets
 
English  
    Published:   September 1, 2008        
            Format:   Paper
    Stock No:   WPIEA2008226   Pages:   50
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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