Down in the Slumps: The Role of Credit in Five Decades of Recessions

Bridges, Jonathan; Jackson, Christopher; McGregor, Daisy

doi:10.2139/ssrn.2957700

Cited by 9 publications

(7 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…All results should be interpreted as the reduced-form impact of cyclical systemic risk on bank profitability, which is not necessarily equal to a causal effect. This approach is fully in line with the existing "Growth-at-risk" literature (See Adrian et al (2016), Adrian et al (2018), IMF (2017), Aikman et al (2018), Lang et al (2019)) and the literature that studies the role of credit and asset bubbles in determining the severity of recessions (Jorda et al (2013b), Jorda et al (2015), Bridges et al (2017)). We leave the study of the causal relationship between cyclical systemic and bank profitability for future research.…”

Section: Empirical Strategysupporting

confidence: 73%

See 1 more Smart Citation

Cyclical Systemic Risk and Downside Risks to Bank Profitability

Lang

Forletta

2020

SSRN Journal

View full text Add to dashboard Cite

show abstract

Section: Empirical Strategysupporting

confidence: 73%

“…2 See for example Jorda et al (2013a), Bridges et al (2017), Aikman et al (2018), andLang et al (2019).…”

Section: The Link Between Cyclical Systemic Risk and Bank Profitabilitymentioning

confidence: 99%

Cyclical Systemic Risk and Downside Risks to Bank Profitability

Lang

Forletta

2020

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…Arcand et al (2012) find that there is a threshold size for the financial sector beyond which finance does not have a positive impact on growth 11 . These findings suggest that private indebtedness becomes a drag on the economic growth as the level of credit stock increases.…”

Section: Related Literaturementioning

confidence: 99%

“…A rapidly growing financial sector has a negative impact on aggregate productivity growth. 11 We refer to this view as "too much finance" hypothesis. In this study, we first document the impact of the total credit growth on the CA balance.…”

Section: Related Literaturementioning

confidence: 99%

Current account and credit growth: The role of household credit and financial depth

Ekinci

Omay

2020

The North American Journal of Economics and Finance

View full text Add to dashboard Cite

Understanding the impact of financial variables on the current account balance is one of the priorities of academic literature and policy makers. Evidence from a broad panel of countries shows that an increase in the credit growth causes a significant deterioration in the current account balance. We find that this result is driven by household credit. Furthermore, we show that total and household credit growth rates have a stronger negative effect on the current account balance for lower levels of financial depth. In other words, the demand boom associated with the credit expansion gets weaker for higher levels of financial depth. Thus, our findings are in line with the "too much finance" hypothesis which states that positive impact of financial development on economic growth vanishes as the level of financial depth increases. Our results suggest that targeted policy measures which curb the excessive household credit growth might be more effective to reduce the external imbalances particularly at the early stages of financial deepening.

show abstract

“…This assessment of the d-SRI is independent of a binary crisis dating and helps to assess the economic loss given a crisis, rather than the probability of a crisis. First, we estimate local projection impulse responses, as proposed by Jordà (2005) and also used in Mian, Sufi, and Verner (2015) and Bridges, Jackson, and McGregor (2017), to quantify the information contained in the d-SRI about the average path of future real GDP growth. Second, we estimate quantile regression impulse responses in order to isolate the predictive power of the d-SRI on the left tail of the conditional GDP growth distribution at various prediction horizons.…”

Section: Chart 16mentioning

confidence: 99%