Financial Cycles and Credit Growth across Countries

Coimbra, N and Rey, H (2018) Financial Cycles and Credit Growth across Countries. AEA Papers and Proceedings, 108. pp. 509-512. ISSN 2574-0768

Abstract

In Coimbra and Rey (2017) we develop a dynamic macroeconomic model with heterogeneous financial intermediaries and endogenous entry. It features time-varying endogenous macroeconomic risk that arises from the risk-shifting behavior of financial intermediaries. We test empirically in a broad panel of countries the implication that credit creation is more elastic to funding costs when the distribution of leverage in the banking system is more positively skewed.