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This paper examines the impact of credit flows, both at the aggregated and disaggregated level, on current account balances for five Southeast Asian economies. Evidence shows that total credit flows improve the current account position, especially in India and Indonesia, in the presence of adequate financial development. Nevertheless, for China, we find that credit flows lead to a decline in current account balances. When disaggregating the total credit flows, in the case of China, we find that household credit negatively influences the current account balance while the bank and business do not have any significant effect. Similarly, for India, we find that most of the improvement in the current account from credit flows comes from household and bank credit. Interestingly, in the case of Indonesia, Malaysia, and Thailand, we find evidence of aggregation bias. The asymmetric impact of disaggregated credit flows implies that policy prescriptions based on aggregate credit flows may be ill-advised and macroeconomic policymakers must implement targeted measures for different types of credit. [ABSTRACT FROM AUTHOR]

This paper examines whether capital flow management and monetary policies effectively reduce credit growth in emerging market economies in the presence of both conventional and unconventional monetary policy actions undertaken by advanced economies. We apply a dynamic panel model with fixed effects to a sample of 21 emerging market economies from 2000 to 2020 using quarterly data and more continuous variables than in other studies rather than limiting the variability using proxies. We find that capital controls and macroprudential regulation, as tools of capital flow management policy, moderate credit growth. This effect is particularly shown in countries with tighter monetary conditions. Our main findings highlight the useful role of coordinating capital flow management and monetary policies. This role stands for both fixed and flexible exchange rate regimes. Lastly, we find capital flow management and monetary policies manage to control credit in normal periods, but their coordination is less effective during crises and high volatility periods. Robustness checks suggest that these findings are stable across alternative proxies used in the literature, thus providing additional support for the validity of our results. [ABSTRACT FROM AUTHOR]

Objective: This study examines the influence of economic policy uncertainty in countries with the largest capital investments in Indonesia, such as Singapore, China, Hong Kong, Japan, the United States, Korea, and the United Kingdom, on the credit growth of commercial banks in Indonesia. Design/Methods/Approach: The sample of this study is all commercial banks in Indonesia from January 2011 to December 2022. This study uses a quantitative approach, using monthly aggregate data on credit growth of commercial banks in Indonesia and economic policy uncertainty data for each country. Hence, the number of observations in this study amounts to 144. This study uses multiple linear regression with the EViews 12 analysis tool. Findings: The findings in this study show that the influence of economic policy uncertainty in the country with the largest capital investment in Indonesia has various influences. Of the several countries that were observed in the study, Japan was one of the countries that had a significant negative impact on the growth of commercial bank credit in Indonesia. Originality/Value: This study complements several previous studies regarding the impact of economic policy uncertainty on Indonesia's micro and macro economy. Studies regarding the impact of economic policy uncertainty on Indonesia's banking credit growth are still limited. Practical/Policy implication: The findings of this study can be used as a reference for banking managers when making decisions such as credit portfolio diversification. By spreading exposure to various sectors and industries, banks can reduce risks related to economic uncertainty in specific sectors. Banking managers need to design products and services that are more creative and adaptive to help banks remain competitive and attract customer interest amidst an uncertain economic situation.

Credit growth related to production, consumption, investment, exports, and imports is considered crucial for economic growth. The Covid-19 pandemic has had a major impact on the economies of countries in the world, as seen from a significant decline in credit growth. This study examines the effects of Economic Growth, Exchange Rate, Inflation, BI Rate, Third Party Funds (TPF), and Non-Performing Loans (NPL) on Banking Credit Growth in Indonesia during the COVID-19 Pandemic Period and regulations issued during that period. Analysis using multiple linear regression method using EViews 10 software with data type in the form of time series. The results of this study showed that only TPF growth had a significant effect. Simultaneously, the variables of Economic Growth, Exchange Rate, Inflation, BI Rate, NPL and Deposit Growth have a significant effect. The most dominant influencing variable is deposit growth.

In empirical studies, the disparity between financial development and environmental quality has prompted us to examine the impact of credit growth on environmental quality in ASEAN countries. These countries have experienced phenomenal credit growth over the past three decades due to their adoption of financial liberalisation, integration and innovation. In this study, we investigated the role of credit growth on environmental quality while controlling for several macroeconomic variables, including regulatory quality, natural resources, foreign direct investment, globalisation and per capita gross domestic product growth. Using static models (ordinary least square [OLS], random effect model, Panel Corrected Standard Error and partial spatial cross correlation) and dynamic models (dynamic OLS, dynamic random effect and two‐step system generalised methods of moments (GMM) on data spanning from 1984 to 2019, we observed a nonlinear association between credit growth and environmental quality. The findings suggest that credit growth may simultaneously have favourable and detrimental effects on environmental quality. High credit growth can lead to increased emissions and environmental degradation through the promotion of fossil fuel‐driven energy consumption, production and distribution of economic resources. However, if the government promotes regulatory quality and encourages lenders to invest more in green technologies and renewable and sustainable energy sources, credit growth may contribute to improved environmental quality. These results carry important policy implications. [ABSTRACT FROM AUTHOR]

Objective: This study examines the influence of economic policy uncertainty in countries with the largest capital investments in Indonesia, such as Singapore, China, Hong Kong, Japan, the United States, Korea, and the United Kingdom, on the credit growth of commercial banks in Indonesia. Design/Methods/Approach: The sample of this study is all commercial banks in Indonesia from January 2011 to December 2022. This study uses a quantitative approach, using monthly aggregate data on credit growth of commercial banks in Indonesia and economic policy uncertainty data for each country. Hence, the number of observations in this study amounts to 144. This study uses multiple linear regression with the EViews 12 analysis tool. Findings: The findings in this study show that the influence of economic policy uncertainty in the country with the largest capital investment in Indonesia has various influences. Of the several countries that were observed in the study, Japan was one of the countries that had a significant negative impact on the growth of commercial bank credit in Indonesia. Originality/Value: This study complements several previous studies regarding the impact of economic policy uncertainty on Indonesia's micro and macro economy. Studies regarding the impact of economic policy uncertainty on Indonesia's banking credit growth are still limited. Practical/Policy implication: The findings of this study can be used as a reference for banking managers when making decisions such as credit portfolio diversification. By spreading exposure to various sectors and industries, banks can reduce risks related to economic uncertainty in specific sectors. Banking managers need to design products and services that are more creative and adaptive to help banks remain competitive and attract customer interest amidst an uncertain economic situation. [ABSTRACT FROM AUTHOR]

This study investigates the effects of public spending shocks across South Africa's credit market conditions from 1965Q2 to 2022Q1 employing a Threshold Vector Autoregression model. Credit conditions are approximated by credit growth. The empirical findings exhibit that the financial environment matters. More specifically, the output multipliers of 1 or 2 standard deviations of positive or negative shocks to public spending are less than unity but bigger when the credit market is in a tight condition. When we look at the public spending components, the output multipliers are more than unity for the public investment shocks in the tight credit condition but not for public consumption shocks. In terms of the output components, both private consumption and private investment multipliers are found to be small, though larger in the tight credit condition. Finally, while public spending shock causes an increase in private credit volume in tight credit conditions, it leads to a decline in private credit volume in easy credit conditions. These results are examined in terms of their policy recommendations. [ABSTRACT FROM AUTHOR]

Company performance information reflected in profit information in the comprehensive income statement is important information seen by investors in making decisions regarding investment and credit, and also information for evaluating management's performance in managing the company. The company's good profit growth reflects that the company's performance is also good. In other words, profit is a measure of a company's performance, so the higher the profit it achieves, the better its performance. This study aims to test and analyze the effect of ROA on profit growth, the effect of ROA on profit growth with credit growth as an intervening variable, the effect of ROE on profit growth, ROE on profit growth with credit growth as an intervening variable, the influence of ROA and ROE on profit growth and the effect of ROA and ROE on profit growth with credit growth as an intervening variable. Based on the test results, the value of the ROA coefficient is -12.031, with a significance level of 0.153. So it can be stated that the hypothesis (Ha1) states that the ROA ratio does not influence credit growth in government banks is acceptable. The results of hypothesis testing (Ha2) in which the value of the ROA coefficient is -3.415 with a significance level of 0.067 can then be stated that the hypothesis (Ha2) stating that the ROA ratio does not affect profit growth with credit growth as an intervening variable in government banks is acceptable. The results of testing the ratio of ROE to profit growth show that the ratio of ROE with a coefficient value of 1.854 with a significance level of 0.095 has a positive but insignificant effect on profit growth. So it can be stated that the hypothesis (H03), which states that the ROE Ratio affects profit growth in government banks, is acceptable. The results of testing the ratio of ROE to profit growth with credit growth as an intervening variable showed that the ROE ratio had a positive effect with a coefficient value of 0.487 with a significance level of 0.045. So it can be stated that the hypothesis (H04), which states that the ROE ratio affects profit growth with credit growth as an intervening variable in government banks, is acceptable. Furthermore, the test results on the effect of credit growth on profit growth showed that the value of the credit growth coefficient of 1.093 and significant at 0.182 was a positive but insignificant effect. Thus the hypothesis (H05) of profit growth influencing the credit growth of government banks is acceptable. [ABSTRACT FROM AUTHOR]

This study evaluates credit growth and analyzes factors affecting credit growth of Vietnamese commercial banks in the context of the Covid-19 pandemic. The study uses financial statement data from 25 Vietnamese commercial banks during the period from the 1st quarter of 2018 to the 3rd quarter of 2021. The credit growth of the banks fluctuated and tended to decrease during the Covid-19 pandemic, especially from the beginning of 2021 to present when Vietnam faced significant outbreaks. The results from applying random effects model show that the Covid-19 pandemic had a negative impact on credit growth. In addition, financial capability also negatively affected credit growth. In contrast, an increase of capital mobilization ability, profit rate, and profit margin led to the growth of credit.

The turbulences that banking systems confronted over the past decades emphasized the importance of a sound macroprudential policy. Therefore, our study analyses the use and the types of macroprudential tools adopted by the authorities, in Central and Eastern European countries, from 2000 to 2018. Our findings reveal a degree of asymmetry within the regulatory framework. More exactly, the frequency, but also the nature of prudential instruments was not symmetrical in the Central and Eastern European countries. The heterogeneity also stands out from a time-varying perspective. We attribute this pattern to the different levels of financial stress that banking systems have been subjected to. Generally, we notice that the macroprudential tools aimed at taming the financial cycle

This study examines the nexus between credit expansion and the financial sustainability of microfinance institutions (MFIs) in Sub-Saharan Africa (SSA). The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability. The study relies on panel dataset of 136 MFIs across 31 SSA countries covering the year 2004 to 2018 and applies the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors to analyze the data. The results establish that credit expansion matters in MFI financial sustainability. Specifically, the study uncovers that while the size of the loan portfolio and loan intensity are positively associated with MFI sustainability, the economic significance of loan intensity is higher. On the other hand, the other credit expansion proxy “credit growth” does not predict the sustainability of MFIs. The results also reveal that the loan intensity and potfolio at risk have interaction effects on MFI sustainability. However, the study fails to support an asymmetric effect of credit expansion on financial sustainability depending on the interest rate charged on loans. The study uses three proxies for credit expansion and gives useful insights for policymakers and/or MFI managers that loan intensity should be the main target of MFIs if the goal is to attain financial self-sufficiency. The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability and sheds light on what is expected from MFI managers to expand credit access to the poor without compromising sustainability.

This article examines the effect of institutional quality on the credit growth of Microfinance Institutions (MFIs) in sub-Saharan Africa (SSA). This paper uses a panel dataset of 131 MFIs across 31 SSA countries spanning 2004–2018 and applies the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors to estimate the parameters. The study reveals that institutional quality is an important factor in the credit growth of MFIs. We uncover new and interesting evidence that political stability “sands the wheels” of credit growth of MFIs, implying that MFIs operating in more politically stable countries tend to be more risk averse and limit credit supply. On the other hand, the rule of law “greases the wheels” of credit growth of MFIs, suggesting that MFIs expand credits more when the rule of law is stronger. We also uncover that credit growth is linked to regulatory quality/government effectiveness positively, but not statistically significant. Similarly, voice and accountability and control of corruption do not have significant effects on MFI credit growth. The findings have several useful implications as discussed in the paper.

The purpose of this study is twofold: First, we examine the capital adjustment process using a partial adjustment framework and second, we test whether capitalization impacts the credit growth of microfinance institutions (MFIs) through the deviation (i.e. the divergence between the actual capital ratio and the implicit long-run target capital). To this end, we use an unbalanced panel dataset of 127 MFIs across 31 countries in Sub-Saharan Africa (SSA) during 2004–2014. We apply the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors for estimating both the capital and lending models. Standard errors for the long-run effects in the capital equation are approximated with the Delta method. Our findings reveal that profitability contributes to the capitalization of MFIs, whereas portfolio risk and liquidity are negatively associated with MFI capital. We also find that large-scale MFIs have lower capitalization, while small-scale MFIs have higher capitalization relative to medium scale MFIs consistent with the “too big to fail” hypothesis. Nevertheless, we uncover that the legal status of MFIs, deposit growth and economic growth have no direct effects on capitalization. The findings also confirm that there is a capital adjustment difficulty in the microfinance industry in SSA. The constant of the model is also statistically significant and has the highest economic significance suggesting that the capital ratio fluctuates mainly around a firm-specific unobserved time-invariant component. The findings, however, fail to support the hypothesis that capitalization impacts MFI lending behavior through the deviation.

The existing literature has displayed mixed results in terms of the relationship between tighter bank capital regulation and lending, which may be due to poor approximation of capital requirements. We emphasise the crucial role of the excess of bank capital over the minimum capital requirement, the capital surplus, in the transmission of more stringent capital regulation. Specifically, we explore the effect of higher capital requirements on bank credit growth in the Czech Republic, drawing on a unique confidential bank-level dataset. Our results indicate that higher additional capital requirements have a negative effect on the credit supply of banks maintaining lower capital surplus. We estimate the effect on annual credit growth to be between 1.2 and 1.8 pp, using a wide range of model specifications and estimation techniques. Furthermore, the relationship between the capital surplus and credit growth proves to be significant also at times of stable capital requirements, i.e., the capital surplus does not serve only as an intermediate channel of higher capital requirements. [ABSTRACT FROM AUTHOR]

In this paper, we assess the effectiveness of macroprudential policies in controlling short- and long-term credit growth. Using a sample of 414 banks located in 61 countries, we document that macroprudential policies manifest a stabilizing effect in the short run, reducing credit growth, with borrower-targeted macroprudential policies being the most effective in taming credit developments. However, in the long-term tight macroprudential policies enhance credit growth. In this case, country-level analysis shows that financial institution-targeted macroprudential policy is more effective than the instruments that target borrowers, whereas at the bank-level the opposite is true. In addition, using a difference-in-difference approach, we emphasize that there is heterogeneity in the relationship among macroprudential policy and credit growth across different types of countries, banking systems, policy regimes and banks. Our findings stress the importance of macroprudential instruments in limiting excessive lending, most notably borrower-based tools. [ABSTRACT FROM AUTHOR]

The aim of this study is to empirically examine the relationship between credit growth, credit quality and social capital of all commercial banks operating in Turkey for a period of twelve years between 2007 and 2018 on the basis of 81 provinces. In order to measure social capital on a provincial basis, the independent variable SC1 was obtained by applying principal component analysis to the variables consisting of 2 network and 2 norm variables. In addition, province-based organ donation rate was used as an alternative social capital variable. Changes in Total Loans (ΔTL), Changes in Real Estate Loans (ΔREL), Changes in Commercial and Industrial Loans (ΔCIL), Changes in Construction Loans (ΔCL), Changes in Non-Performing Loans (ΔNPL), Ratio of Non-Performing Loans to Total Loans (NPL/TL) and Ratio of Non-Performing Loans to Total Assets (NPL/TA) were determined as the dependent variable. The relationship between the level of social capital (SC1) and seven dependent variables on a provincial basis in Turkey was analyzed and measured using panel data techniques. The results of the analysis show that the relationship between the social capital level of the provinces, credit growth and non-performing loans are negative and significant. The results of the study show that the level of social capital is important and decisive in terms of credit growth and credit risk of banks. [ABSTRACT FROM AUTHOR]

Do countries learn from their mistakes? Here we consider one example of this question with respect to banking crises using the concept of effective learning, that is, learning plus the ability to implement such learning. Excessive credit growth is widely considered to be the strongest contributor to banking crises. Thus, it is interesting to see whether banking crises are associated with lower rates of credit growth in the future and if so, what are major factors which influence such changes in behavior. In previous research we have found that, on average, banking crises are followed by substantially lower credit growth but this varies considerably across countries. Our hypothesis is that lower rates of future credit growth reflect a process of learning from one's mistakes and taking corrective actions. This paper offers an investigation of some of the political economy factors that may influence whether crises result in greater discipline. Overall, we found very little average effective learning in stable autocracies and on the contrary, found considerable discipline in stable democracies. Nevertheless, we found even larger discipline effects in countries that transitioned to democracy in the wake of banking crises. Our results regarding the role of veto players and government turnovers are inconclusive. [ABSTRACT FROM AUTHOR]

In developed economies, macroeconomic indicators such as unemployment and price indices tend to predict new credit expansion. We explore whether business and consumer surveys complement traditional macroeconomic variables in predicting new household and corporate loans in the following 3, 6, 9 and 12 months. Using monthly data for Slovakia, starting in 2009 and ending in 2019, we use Bayesian model averaging to examine 102 potential credit drivers. Our results show that, with the exception of interest rates and unemployment, traditional macroeconomic variables do not seem to drive credit market development. Instead, survey-based perceptions, calendar effects and policy uncertainty show relevant predictive power. [ABSTRACT FROM AUTHOR]

The purpose of this study is twofold: First, we examine the capital adjustment process using a partial adjustment framework and second, we test whether capitalization impacts the credit growth of microfinance institutions (MFIs) through the deviation (i.e. the divergence between the actual capital ratio and the implicit long-run target capital). To this end, we use an unbalanced panel dataset of 127 MFIs across 31 countries in Sub-Saharan Africa (SSA) during 2004–2014. We apply the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors for estimating both the capital and lending models. Standard errors for the long-run effects in the capital equation are approximated with the Delta method. Our findings reveal that profitability contributes to the capitalization of MFIs, whereas portfolio risk and liquidity are negatively associated with MFI capital. We also find that large-scale MFIs have lower capitalization, while small-scale MFIs have higher capitalization relative to medium scale MFIs consistent with the "too big to fail" hypothesis. Nevertheless, we uncover that the legal status of MFIs, deposit growth and economic growth have no direct effects on capitalization. The findings also confirm that there is a capital adjustment difficulty in the microfinance industry in SSA. The constant of the model is also statistically significant and has the highest economic significance suggesting that the capital ratio fluctuates mainly around a firm-specific unobserved time-invariant component. The findings, however, fail to support the hypothesis that capitalization impacts MFI lending behavior through the deviation. [ABSTRACT FROM AUTHOR]

This article investigates the determinants of non-performing loans for a panel of EEC countries and the implications for the real economy, covering the period 2005-2017. Among the determinants, the paper proposes macroeconomic factors, banking sector variables, and cost and governance indicators. Additionally, the paper explores the extensive use of macroprudential measures in these countries. Using a panel with fixed effects and a dynamic GMM estimator, the results support the existing findings that adverse macroeconomic developments are generally associated with higher non-performing loans, while increases in NPLs have a rather transitory effect on the real economy and credit. NPL ratios increase if macroeconomic conditions deteriorate, while an improvement in the government effectiveness reduces them. A more profitable and better capitalized banking sector generally leads to lower NPLs. Moreover, countries with higher past credit growth rates witnessed higher NPLs in the periods that followed. These results support the use of macroprudential measures for increasing the resilience of borrowers, such as limits on the indebtedness level (such as debt service-to-income, DSTI or loan-to-value, LTV caps), as tools to temper the credit cycle.

The main function of banks is to facilitate the better functioning of lending activity, helping to improve efficiency and rational distribution of resources between different entities. If credit is used to purchase productive resources, this will help economic growth. The overall development of credits is usually based on a combination of factors that simultaneously impact the demand and supply of bank credit. Using a qualitative and quantitative analysis, the main objective of this paper is to establish the analysis of the evolution and determinants of credit activities, especially of the factors that have an impact on credit growth. Also, this paper will analyze the effects that the current pandemic has brought to the European banking sector in general and in particular to the credit activity. The results showed that economic growth, credit quality, financial intermediation rate, along with foreign and domestic funding sources are the main determinants of credit growth.

This study purposes to discover the interactive relationship between credit growth and profitability and to examine factors that affect the credit growth and profitability of people's credit funds (PCFs). After regression analysis on a set of panel data from 2013 to 2018 on 24 selected PCFs, it appeared that deposit growth and loan-to-deposit ratio had positive relationships with credit growth, and capital adequacy ratio and profitability had negative relationships with credit growth of PCFs. The age of PCFs has a positive relationship with profitability, while the credit growth, debt-to-equity ratio, non-performing loan ratio, economic growth and inflation have negative relationships with profitability of PCFs. The study found the credit growth and profitability have relationships with each other in a contrary trend. Based on the findings the study proposes policy measures that could be implemented by the managers to increase PCFs’ credit growth rate and profitability.

In this study, we analyze the effects of macroprudential measures on bank lending in the European Union. We develop several dedicated macroprudential policy indices reflecting different policy actions taken by the authorities in individual member countries, with the aim to affect credit activity in national banking sectors. In our empirical model, we measure responsiveness of gross loans in banks to selected macroprudential policy indices, taking into account a set of bank level and macroeconomic control variables. We use the Fitch Connect bank level dataset with financial statements for 3434 European banks with 18,616 observations and macroeconomic data provided by the World Bank and IMF statistics covering the period between 2000 and 2017. Information on the use of macroprudential instruments is taken from a new macroprudential policy database, MaPPED, gathered and published by European Central Bank, where we were able to extract the information on both timing and the direction of use of the macroprudential policy instruments. Our findings show that macroprudential instruments can be used effectively for regulatory modulation of credit activity in banks, with some fluctuations in the level of the effectiveness through the business cycles. Therefore, in loosening cycles, macroprudential measures are found to be strongly and positively associated with bank lending. On the other side, tightening actions are found to have a downward effect on bank lending, while these effects are less pronounced. These results are of great importance in the current crisis arising from the impact of COVID-19, as policymakers are trying to support the economy by easing macroprudential regulatory constraints to ensure lending to the real sector. [ABSTRACT FROM AUTHOR]

In this study, we analyze the effects of macroprudential measures on bank lending in the European Union. We develop several dedicated macroprudential policy indices reflecting different policy actions taken by the authorities in individual member countries, with the aim to affect credit activity in national banking sectors. In our empirical model, we measure responsiveness of gross loans in banks to selected macroprudential policy indices, taking into account a set of bank level and macroeconomic control variables. We use the Fitch Connect bank level dataset with financial statements for 3,434 European banks with 18,616 observations and macroeconomic data provided by the World Bank and IMF statistics covering the period between 2000 and 2017. Information on the use of macroprudential instruments is taken from a new macroprudential policy database, MaPPED, gathered and published by European Central Bank, where we were able to extract the information on both timing and the direction of use of the macroprudential policy instruments. Our findings show that macroprudential instruments can be used effectively for regulatory modulation of credit activity in banks, with some fluctuations in the level of the effectiveness through the business cycles. Therefore, in loosening cycles, macroprudential measures are found to be strongly and positively associated with bank lending. On the other side, tightening actions are found to have a downward effect on bank lending, while these effects are less pronounced. These results are of great importance in the current crisis arising from the impact of COVID-19, as policymakers are trying to support the economy by easing macroprudential regulatory constraints to ensure lending to the real sector.

By developing a novel measure of corporate borrowing exuberance the study finds that such a phenomenon is not only higher but also is pro-cyclical with the periods of credit booms in the Indian economy. The study provides initial evidence on the quality of loans against the quantum of loans made available during credit growth cycles. Our research points towards using a unified framework to identify ex-ante misallocation in bank credit, which eventually appears as non-performing assets ex-post. [ABSTRACT FROM AUTHOR]

Credit is an economic category and is also a product of the commodity economy, which exists through many socio-economic forms to promote economic growth. Therefore, the objective of this paper is to analyst, compare and forecast domestic credit growth in Vietnam's and China's economy. Thus, the paper is applied by a method of an autoregressive integrated moving average (ARIMA) model. This model is fitted to time series data both to better understand the data and to forecast future points in the series. Hereby, the methodology is selected by Vietnam's bestfit model ARIMA (2,3,1) and China's best-fit model ARIMA (2,3,5). Analytical data are collected from 1996 to 2017, the sample fitted the model and is statistically significant. The result show the forecast result for next years. The Vietnamese and Chinese economy are the open economies and have domestic credit greatly contributed to economic growth. These results are the basis for policymakers to have a general view and define the impact of domestic credit growth on GDP between the two countries.

International comparisons reveal that – even controlling for a host of explanatory factors – credit depth is exceptionally low in Mexico. Using panel data methods linking credit growth and fundamentals, this paper estimates a long-term gap between actual and expected credit of about 40 percent of GDP. Possible explanations include the history of banking crises, the large informal sector and an inefficient legal system. Using a disequilibrium regression approach, this paper also finds that supply factors are particularly important as determinants of credit in Mexico. Recent financial reforms address many of the supply constraints, but their success will depend on implementation. The main challenge going forward will be to support financial deepening, while limiting risks to financial stability.

In this paper, we analyse the determinants of credit growth for banks operating in 20 countries in the post-communist Central, Eastern and South-Eastern Europe (CESEE). We focus on foreign-owned banks and the parent-subsidiary nexus against the background of all banks operating in this part of Europe. Our goal is to determine whether the macroeconomic and bank-specific determinants for host countries have a similar impact on the entire group of banks operating in CESEE and on its subset of foreign-owned banks and whether the rate of credit growth could be considered ceteris paribus equal across the foreign-owned and the complete set of banks in the CESEE. To this end, we use panel data regressions on approximately 4,600 bank-year observations over the period from 1995 to 2014. We conclude that the determinants of banks' behaviour in the CESEE countries are consistent regardless of these banks' ownership, the period and their EU membership. Although having a foreign investor expands the set of relevant determinants, the presence of such investors does not overshadow the importance of local conditions. [ABSTRACT FROM AUTHOR]

China's response to the global financial crisis and its post-2008 stimulus package and credit surge marked a critical juncture for its state-directed banking system. One result was the subsequent growth of the shadow banking sector marked by incremental 'informal institutional adaptation' and a greater role for markets. We employ historical institutionalist (HI) theory to help explain these developments but critique its current approach to critical junctures which has a limited, temporarily specific and overly static account of institutional change; one which overlooks the importance of changes on either side of the critical junctures and which is unable to integrate its emphasis on critical junctures with alternative theories, such as incremental accounts of institutional change. Using the empirical case of the evolution in China's post-GFC banking and finance, a revised institutional approach is developed which is able to bridge these theoretical divides. [ABSTRACT FROM AUTHOR]

Although the literature has provided evidence of the predictive power of credit for financial and banking crises, this article aims to investigate the grounds of this link by assessing the interrelationships between credit and banking fragility. The main identification assumption represents credit and banking fragility as a system of simultaneous joint data generating processes whose error terms are correlated. We test the null hypotheses that credit positively affects banking fragility—a vulnerability effect—and that banking fragility has a negative effect on credit—a trauma effect. We use seemingly unrelated regressions and 3SLS on a panel of European Union (EU) countries from 1998 to 2012 and control for the financial and macroeconomic environment. We find a positive effect of credit on banking fragility in the EU as a whole, in the Eurozone, in the core of the EU but not at its periphery, and a negative effect of banking fragility on credit in all samples. [ABSTRACT FROM AUTHOR]

In this paper, endogenous and exogenous factors that affect the credit growth rate of some Western Balkan countries (Bosnia and Herzegovina, Croatia and Serbia) and the credit policy in Turkey will be investigated through a multiple regression analysis. The credit growth rate will be used as the dependent variable while the rate of the non-performing loans along with the growth rate of the deposit, the return of equity and the real growth rate of the gross domestic product will be used as independent variables. In this paper the STATA 13.0 software package will be used. This data analysis will include a quarterly basis data for the period: 2007q1 – 2017q2 due to its higher significance. The result of the regression analysis showed that there is a reverse relationship between the rate of the non-performing loans and the credit growth rate for all the observed countries. The high share of problematic loans in total loans relatively reflects in a negative way the overall tendency of the banks towards taking risks and credit growth. It reduces the profitability of the banking sector and increases the systemic risk as well. The basic results of the regression analysis also showed a positive relationship between economic growth and the credit growth of banks. On the one hand, the economic growth of the region insufficiently follows the credit growth due to the stagnation of the real sector, and the recovery of the economy on the other hand. Similarly, there is a positive relationship between the growth rate of the deposits and credit growth, since the deposits sources are the basis for performing credit nomination. Except for Croatia where a negative correlation was recorded, there is a positive relationship in terms of the return on equity and credit growth.

This paper extends the available datasets on the use of macroprudential policies in CEE countries, and provides an econometric assessment of the effectiveness of these policies in mitigating financial stability risks associated with excessive credit growth before the global financial crisis. The model results imply that macroprudential policies were more effective in slowing credit to households than credit to the non-financial corporate sector, mainly because the latter had access to nonbank and cross-border credit in addition to domestic bank credit.

This paper presents a detailed account of the rich set of macroprudential measures (MPPs) implemented in Bulgaria, Croatia, Romania, and Serbia during their synchronized boom and bust cycles in 2002–12, and assesses their effectiveness in managing credit growth. Only strong MPPs helped contain domestic credit growth during the boom years, but circumvention via direct external borrowing offset their effectiveness to a large extent. MPPs taken during the bust had no discernible impact. The paper concludes that (i) proper calibration of MPPs is of the essence; (ii) only strong, broad-based MPPs can contain credit booms; (iii) econometric studies of macroprudential policy effectiveness should focus on concrete policy measures rather than on instruments use; and (iv) in so doing should allow for possible non-linear and state-contingent effects.

This article investigates the determinants of non-performing loans for a panel of EEC countries and the implications for the real economy, covering the period 2005-2017. Among the determinants, the paper proposes macroeconomic factors, banking sector variables, and cost and governance indicators. Additionally, the paper explores the extensive use of macroprudential measures in these countries. Using a panel with fixed effects and a dynamic GMM estimator, the results support the existing findings that adverse macroeconomic developments are generally associated with higher non-performing loans, while increases in NPLs have a rather transitory effect on the real economy and credit. NPL ratios increase if macroeconomic conditions deteriorate, while an improvement in the government effectiveness reduces them. A more profitable and better capitalized banking sector generally leads to lower NPLs. Moreover, countries with higher past credit growth rates witnessed higher NPLs in the periods that followed. These results support the use of macroprudential measures for increasing the resilience of borrowers, such as limits on the indebtedness level (such as debt service-to-income, DSTI or loan-to-value, LTV caps), as tools to temper the credit cycle. [ABSTRACT FROM AUTHOR]

This paper empirically investigates if, in what direction, and under what circumstances financial inclusion amplifies or moderates output volatility, which is a matter of concern for monetary policymakers in emerging and developing economies (EMDEs). The empirical estimation for a large panel of over 100 EMDEs spanning the period 1995 to 2013 finds a strong and persistent trade-off between higher financial inclusion and output stability. The paper also finds strong and robust evidence of non-linearity governing this relationship. Countries with high degrees of financial inclusion as well as those that are relatively lower income tend to experience a significant trade-off between financial inclusion and output stability. Further, the paper also finds that reckless financial inclusion coinciding with excessive credit growth tends to worsen output volatility. [ABSTRACT FROM AUTHOR]

This paper investigates the role of bank credit in predicting US recessions since the 1960s in the context of a bivariate probit model. A set of results emerge. First, credit booms are shown to have strong positive effects in predicting declines in the business cycle at horizons ranging from 6 to 9 months. Second, I propose to isolate the effect of credit booms by identifying the contribution of excess bank liquidity alongside a housing factor in the downturn of each cycle. Third, the out‐of‐sample performance of the model is tested on the most recent credit‐driven recession: the Great Recession of 2008. The model performs better than a more parsimonious version where we restrict the effect of credit booms on the business cycle in the system to be zero. [ABSTRACT FROM AUTHOR]

We investigate how group- and market-specific traits impact the credit policy of foreign-owned banks operating in Central, Eastern and South-Eastern European (CESEE) countries over the 1995–2015 period using an instrumental variable fixed effects approach. This period includes the years of the global financial crisis (GFC), during which the Vienna Initiative (VI) was established to limit the negative impact of the crisis on five CESEE countries in which foreign-owned banks play a considerable role. We find evidence that the credit policy of banks operating in VI countries and/or owned by VI parents differs from the overall policy in the region. Our study suggests that parent banks focus on the geographical diversification of group assets on host markets, followed by ensuring that there is strict capital control and that return on equity outperforms that of the market. Our results confirm that the VI was efficient in immunising subsidiaries and countries. [ABSTRACT FROM AUTHOR]

Prior studies have shown a significant impact of the leverage level on economic outcomes. This study extends the literature by examining the role of leverage growth in predicting the occurrence of financial crises. Based on a dataset of 42 economies over the period 1980–2017, the results indicate a positive and significant association between leverage growth and the likelihood of financial crises. Moreover, leverage level plays no relevant role in predicting the financial crises after leverage growth has been controlled for. Further analysis also confirms the contribution of relative sectoral leverage growth to financial crises. Specifically, both the difference between the private and the government leverage growth, and the difference between the household and non-financial corporate leverage growth are positively associated with the likelihood of financial crises. These findings suggest that we should pay much more attention to leverage growth and its impacts on financial crises. [ABSTRACT FROM AUTHOR]

The main function of banks is to facilitate the better functioning of lending activity, helping to improve efficiency and rational distribution of resources between different entities. If credit is used to purchase productive resources, this will help economic growth. The overall development of credits is usually based on a combination of factors that simultaneously impact the demand and supply of bank credit. Using a qualitative and quantitative analysis, the main objective of this paper is to establish the analysis of the evolution and determinants of credit activities, especially of the factors that have an impact on credit growth. Also, this paper will analyze the effects that the current pandemic has brought to the European banking sector in general and in particular to the credit activity. The results showed that economic growth, credit quality, financial intermediation rate, along with foreign and domestic funding sources are the main determinants of credit growth. [ABSTRACT FROM AUTHOR]