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Effects of a banking crisis on credit growth in developing countries

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  • Uch, Raksmey
  • Miyamoto, Hiroaki
  • Kakinaka, Makoto

Abstract

This study examines how a banking crisis affects credit growth in developing countries by considering two states of financial conditions: financial cycles and financial development. We estimate dynamic responses of credit growth to a banking crisis by using the local projection method. Our empirical results reveal that a banking crisis has an adverse impact on the credit cycle, and this negative effect is more substantial during a financial boom. We also find that the negative crisis effect is further magnified in countries with a high level of financial development.

Suggested Citation

  • Uch, Raksmey & Miyamoto, Hiroaki & Kakinaka, Makoto, 2021. "Effects of a banking crisis on credit growth in developing countries," Finance Research Letters, Elsevier, vol. 43(C).
    • Handle: RePEc:eee:finlet:v:43:y:2021:i:c:s1544612321000854
    DOI: 10.1016/j.frl.2021.102004
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    More about this item

    Keywords

    banking crisis; credit growth; financial cycles; financial development;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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