The intertwining of credit and banking fragility

Creel, Jérôme; Hubert, Philippe; Labondance, Fabien

doi:10.1002/ijfe.1799

Cited by 8 publications

(9 citation statements)

References 65 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This kind of interrelationship between private credit and non-performing loans on economic performance extends the intertwining effects evidenced in Creel et al (2019). There, we show that higher private credit generates higher ratios of non-performing loans -a vulnerability effect -and that higher ratios of non-performing loans generate a decline in private credit -a trauma effect -.…”

Section: Baselinesupporting

confidence: 77%

Credit, banking fragility, and economic performance

Creel

Hubert

Labondance

2022

Oxford Economic Papers

Self Cite

View full text Add to dashboard Cite

This article explores the role of banking fragility for the relationship between private credit and economic growth and bridges two literatures, one on the link between credit and economic growth and the other on the effects of banking fragility on credit dynamics. We consider two types of banking fragility on both the asset and liability sides: nonperforming loans and the ratio of bank capital to assets. Using a standard growth model framework and a dynamic generalized method of moment panel estimator on data for European Union countries, we find that banking fragility has a negative effect on economic growth. A consequence of considering banking fragility is that credit appears to have a positive effect on economic growth only when banking fragility is relatively low.

show abstract

Section: Baselinesupporting

confidence: 77%

Credit, banking fragility, and economic performance

Creel

Hubert

Labondance

2022

Oxford Economic Papers

Self Cite

View full text Add to dashboard Cite

show abstract

“…Other studies have focused on banking activities. Creel et al (2021) studied a panel of EU countries over the period 1998-2012 and found a positive effect of credit on bank fragility in the euro area but not in the periphery of the EU. They also found a negative effect of bank fragility on lending for the EU as a whole.…”

Section: Literature Review Of Crisis Results Over the Banking Systemsmentioning

confidence: 99%

Consequences of the Financial Crisis and Capital Adequacy in Greek Banks

Karafolas,

Stergiou

2023

JFRM

View full text Add to dashboard Cite

Distinct from other countries, in Greece, the global financial crisis continued during the decade 2010 and became an economic crisis resulting in a recession. It resulted from implementing measures aimed at reducing Greece's high public debt, as the country had reached an agreement with the European Union and the International Monetary Fund on public borrowing. Unlike other countries, public debt is at the core of the Greek crisis. The economic crisis has primarily affected the Greek banking system, capital banks, and specialized credit institutions such as cooperative banks. The economic depression during the decade was reflected in the banks' activities and results, while in the middle of the decade, it led to a considerable increase in nonperforming loans. In addition to these consequences, most Greek banks suffered from the halving of the value of Greek bonds in 2011, as they were involved in financing the Greek government. The generalization of these phenomena distinguishes the Greek case from other banking systems while limiting the argument of poor management for the outcomes of the banking crisis in Greece. Banks' difficulty meeting the capital requirements set out in the Basel Regulations III was a vital component of the banking crisis. As a result of these difficulties, some banks were unable to meet the requirements and were forced to close or be sold by their parent banks. In the case of a particular category of banks, the so-called economically significant banks, there was substantial public support for capitalization, contrary to the other banks, which had to raise the necessary capital themselves. This article examines the impact of capital requirements on bank development, both for capital and cooperative banks, and also attempts some comparative accounts between them.

show abstract

“…It is useful to frame this relationship for EMCCA. In this perspective, Creel et al (2016) work on a sample of European Union countries (27 countries) over the period 1998-2011 and use the generalised method of moments. Creel et al (2016) find that the policy space of the central bank expands in the presence of prudential policy instruments.…”

Section: Theory and Empirical Approachesmentioning

confidence: 99%

“…In this perspective, Creel et al (2016) work on a sample of European Union countries (27 countries) over the period 1998-2011 and use the generalised method of moments. Creel et al (2016) find that the policy space of the central bank expands in the presence of prudential policy instruments. However, the introduction of prudential policy tools into the relationship does not allow the authors to conclude whether an inverse relationship between financial sector development and inflation is ruled out.…”

Section: Theory and Empirical Approachesmentioning

confidence: 99%

Does the development of financial system influence the level of inflation?

ENGUENE,

MBANGA PAGAL,

WEPAGUIEWE

2023

J.o A.F.

View full text Add to dashboard Cite

Purpose: The objective of this paper is to examine the impact of financial development on inflation in the Economic and Monetary Community of Central Africa. Method: We use a system GMM as an empirical strategy, using data from the BEAC and WDI databases over the period 1996–2022. Results: The main results of this study show that despite the low level of inflation observed in the Economic and Monetary Community of Central Africa, the credit risk associated with the provision of credit increases inflation. This increase in inflation reduces the performance of the financial sector. Originality of the article: The originality of this article lies in the fact that the central bank must consider financial development as a tool of prudential analysis, which makes it possible to increase the effectiveness of the fight against inflation while improving the performance of the financial sector. This study also shows that financial development is a determinant of inflation.

show abstract

The intertwining of credit and banking fragility

Cited by 8 publications

References 65 publications

Credit, banking fragility, and economic performance

Credit, banking fragility, and economic performance

Consequences of the Financial Crisis and Capital Adequacy in Greek Banks

Does the development of financial system influence the level of inflation?

Contact Info

Product

Resources

About