## Figure 2.13. The Association of a Credit Expansion with the Riskiness of Credit Allocation Depends on Policy and Institutional Settings

## Source details

**Canonical URL:** [Figure 2.13. The Association of a Credit Expansion with the Riskiness of Credit Allocation Depends on Policy and Institutional Settings](https://www.imf.org/-/media/files/publications/gfsr/2018/april/chapter-2/pdf/figure2-13.pdf)

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### Description of the figure
- Horizontal axis shows policy and institutional settings: Supervisor independence; Minority shareholder protection; Leverage ratio constraint; Ceilings and penalties on credit growth; Rareness of state-owned enterprises.
- Vertical axis scale (standard deviations of the riskiness of credit allocation) ranges with explicit tick values: –0.5, –0.4, –0.3, –0.2, –0.1, 0.0, 0.1, 0.2, 0.3, 0.4.
- The figure displays the range of impact of a contemporaneous increase in the change in the credit-to-GDP ratio by one standard deviation on four measures of the riskiness of credit allocation (leverage-, interest coverage ratio–, debt overhang–, and expected default frequency–based), conditional on policy and institutional settings being at a “lower” setting or a “higher” setting.

### Definitions and settings used in the analysis
- “Lower” (policy setting): no policy change during the year.
- “Higher” (policy setting): one tightening action during the year.
- For non-macroprudential variables, “lower” (higher) setting means a level equal to the 25th percentile (75th percentile) of their distribution.
- Riskiness measures used: leverage-based, interest coverage ratio–based, debt overhang–based, expected default frequency–based.

### Key quantitative features shown
- The analysis conditions on a contemporaneous increase in the change in the credit-to-GDP ratio by one standard deviation.
- Vertical axis explicit tick values preserved: –0.5; –0.4; –0.3; –0.2; –0.1; 0.0; 0.1; 0.2; 0.3; 0.4.

### Significance coding in the figure
- Dark-colored bars: effects are statistically significant at the 10 percent level or higher for four measures out of four.
- Light-colored bars: effects are statistically significant at the 10 percent level or higher for three measures out of four.
- Empty bars: effects are statistically insignificant at the 10 percent level for the four measures.

### Note on sources and methodology
- Sources: Worldscope; and IMF staff estimates.
- See Annex 2.2 for details on the methodology.

*Source: figure2-13*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/april/chapter-2/pdf/figure2-13.pdf_