## Credit Reversals

_IMF Working Papers, April 23, 2021_

## Source details

**Canonical URL:** [Credit Reversals](https://www.imf.org/en/publications/wp/issues/2021/04/23/credit-reversals-50354)

## Other formats

- [Markdown version](/en/publications/wp/issues/2021/04/23/credit-reversals-50354/index.md)
- [Structured JSON version](/en/publications/wp/issues/2021/04/23/credit-reversals-50354/index.json)
- [Bundle manifest](/en/publications/wp/issues/2021/04/23/credit-reversals-50354/bundle-manifest.json)

## Bibliographic details
- Authors: Francisco F. Vazquez
- Published: April 23, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513582641.001

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### Summary and main findings
- The paper studies episodes in which aggregate bank credit contracts alongside expanding economic activity—credit reversals.
- Using data for 179 countries during 1960‒2017, the paper finds that reversals are a relatively common phenomenon—on average, they occur every five years.
- By comparison, banking crises take place every eight years on average.
- Credit reversals and banking crises appear related:
  - Reversals become more likely in the aftermath of banking crises.
  - The likelihood of crises drops following reversals.
- In terms of foregone economic activity, reversals are shown to be very costly, at about two-thirds of the costs of banking crises after taking into account their relative frequencies.

### Data and scope
- Countries covered: 179
- Sample period: 1960‒2017

### Key statistics and metrics
- Average frequency of credit reversals: every five years.
- Average frequency of banking crises: every eight years.
- Relative cost: reversals cost about two-thirds of the costs of banking crises when accounting for relative frequencies.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2021/04/23/credit-reversals-50354_