The riskiness of credit allocation and financial stability
We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)�...
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| Veröffentlicht in: | IMF working paper 2019-09, Vol.19 (207) |
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| creator | Brandao Marques, Luis |
| description | We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)'s ISS indicator, helps predict downside risks to GDP growth and systemic banking crises, two to three years ahead. Our analysis indicates that the riskiness of credit allocation is both a measure of corporate vulnerability and of investor sentiment. Economic forecasters wrongly predict a positive association between the riskiness of credit allocation and future growth, suggesting a flawed expectations process |
| doi_str_mv | 10.5089/9781513513775.001 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 1018-5941 |
| ispartof | IMF working paper, 2019-09, Vol.19 (207) |
| issn | 1018-5941 |
| language | eng |
| recordid | cdi_gale_infotraccpiq_609890418 |
| source | Alma/SFX Local Collection |
| subjects | Analysis Banking industry Banks (Finance) Corporate debt Credit ratings Financial crises Financial statements Leverage |
| title | The riskiness of credit allocation and financial stability |
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