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Domestic Credit Growth, International Capital Inflows, and Risk Perception in Global Markets

Author

Listed:
  • Satoshi Tobe

    (Graduate School of Economics, Keio University)

Abstract

This study explores the interaction among credit growth, capital inflows, and risk perception in global markets. An empirical analysis reveals that capital inflows, especially cross-border bank inflows, and risk perception in global markets are key drivers of credit growth in developed countries, whereas country-specific factors mainly have ambiguous effects. The results indicate that cross-border banking contributed toward excess credit creation and its bust, especially in the late 2000s. Moreover, they also indicate that the effects of the US financial and monetary conditions are transmitted to developed countries through cross-border capital transactions and risk perceptions.

Suggested Citation

  • Satoshi Tobe, 2017. "Domestic Credit Growth, International Capital Inflows, and Risk Perception in Global Markets," Economics Bulletin, AccessEcon, vol. 37(2), pages 631-636.
    • Handle: RePEc:ebl:ecbull:eb-17-00085
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I2-P57.pdf
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    References listed on IDEAS

    as
    1. Evgenia Passari & Hélène Rey, 2015. "Financial Flows and the International Monetary System," Economic Journal, Royal Economic Society, vol. 0(584), pages 675-698, May.
    2. Olivier Blanchard & Jonathan D. Ostry & Atish R. Ghosh & Marcos Chamon, 2017. "Are Capital Inflows Expansionary or Contractionary? Theory, Policy Implications, and Some Evidence," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(3), pages 563-585, August.
    3. Hume, Michael & Sentance, Andrew, 2009. "The global credit boom: Challenges for macroeconomics and policy," Journal of International Money and Finance, Elsevier, vol. 28(8), pages 1426-1461, December.
    4. repec:dau:papers:123456789/14524 is not listed on IDEAS
    5. Hyun Song Shin, 2012. "Global Banking Glut and Loan Risk Premium," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 60(2), pages 155-192, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Issam Laguir & Rebecca Stekelorum & Jamal Elbaz & Lamia Laguir, 2017. "Financial and environmental performances in the banking industry: A non-linear approach," Economics Bulletin, AccessEcon, vol. 37(4), pages 2616-2624.

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    More about this item

    Keywords

    International capital flow; Credit growth; Risk perception;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance

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