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The Non-Bank Credit Cycle

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Abstract

We investigate the cyclical properties of non-bank credit and its relevance for financial stability. We construct a measure of non-bank credit for a large sample of countries and find that its cyclical properties differ from those of bank credit. Non-bank credit cycles are highly correlated with bank credit cycles in some countries but not in others. Moreover, non-bank credit cycles are less synchronised than bank credit cycles across countries. Finally, non-bank credit cycles could act as a leading indicator for currency, but not for systemic banking, crises. The opposite is true for bank credit cycles. These findings highlight the value added of monitoring non-bank credit.

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  • Esti Kemp & Rene van Stralen & Alexandros Vardoulakis & Peter J. Wierts, 2018. "The Non-Bank Credit Cycle," Finance and Economics Discussion Series 2018-076, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2018-76
    DOI: 10.17016/FEDS.2018.076
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    Cited by:

    1. Patty Duijm, 2019. "Foreign funded credit: funding the credit cycle?," DNB Working Papers 658, Netherlands Central Bank, Research Department.

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    More about this item

    Keywords

    credit cycles; Financial crisis; leading indicators; Non-bank credit;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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