An Anatomy of Credit Booms: Evidence from Macro Aggregates and Micro Data

52 Pages Posted: 8 Oct 2008

See all articles by Enrique G. Mendoza

Enrique G. Mendoza

National Bureau of Economic Research (NBER); University of Pennsylvania

Marco E. Terrones

International Monetary Fund (IMF)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2008

Abstract

We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.

Keywords: Credit expansion, Business cycles, Emerging markets, Asset prices, Current account deficits, Productivity

Suggested Citation

Mendoza, Enrique G. and Terrones, Marco E., An Anatomy of Credit Booms: Evidence from Macro Aggregates and Micro Data (September 2008). IMF Working Papers, Vol. , pp. 1-50, 2008. Available at SSRN: https://ssrn.com/abstract=1278437

Enrique G. Mendoza

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://www.sas.upenn.edu/~egme/index.html

Marco E. Terrones (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4329 (Phone)

HOME PAGE: http://imf.org/external/np/CV/AuthorCV.aspx?AuthID=171

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