Determinants of Bank Credit in Emerging Market Economies

21 Pages Posted: 14 Mar 2011

See all articles by Kai Guo

Kai Guo

International Monetary Fund (IMF)

Vahram Stepanyan

International Monetary Fund (IMF)

Date Written: March 2011

Abstract

We examine changes in bank credit across a wide range of emerging market economies during the last decade. The rich time-series and cross-section information allows us to draw broader lessons compared to many existing researches, which focus on a specific set of emerging market economies or on shorter time periods. Our results show that domestic and foreign funding contribute positively and symmetrically to credit growth. The results also indicate that stronger economic growth leads to higher credit growth, and high inflation, while increasing nominal credit, is detrimental to real credit growth. We also find that loose monetary conditions, either domestic or global, result in more credit, and that the health of the banking sector also matters. Finally, we discuss some policy lessons.

Keywords: Bank credit, Banking sector, Credit expansion, Cross country analysis, Economic growth, Emerging markets, Inflation, Monetary policy

Suggested Citation

Guo, Kai and Stepanyan, Vahram, Determinants of Bank Credit in Emerging Market Economies (March 2011). IMF Working Paper No. 11/51, Available at SSRN: https://ssrn.com/abstract=1784539

Kai Guo

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Vahram Stepanyan (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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