Credit Booms and Busts in Emerging Markets

61 Pages Posted: 3 Jun 2017

See all articles by Alin Marius Andries

Alin Marius Andries

Alexandru Ioan Cuza University - Faculty of Economics and Business Administration

Martin Brown

University of St. Gallen

Date Written: July 2017

Abstract

We investigate to what extent corporate governance and risk management mitigate the involvement of banks in credit boom and bust cycles. We study a unique, hand‐collected dataset covering 156 banks from Central and Eastern Europe during 2005–2012. We document that stronger risk management is associated with more moderate pre‐crisis credit growth but not with fewer credit losses in the crisis. With respect to bank governance, we find that a higher share of foreign members on the supervisory board is associated with less rapid credit growth in the pre‐crisis period and a lower level of credit losses during the crisis period.

Keywords: Credit boom‐bust cycles, corporate governance, risk management

Suggested Citation

Andries, Alin Marius and Brown, Martin, Credit Booms and Busts in Emerging Markets (July 2017). Economics of Transition, Vol. 25, Issue 3, pp. 377-437, 2017. Available at SSRN: https://ssrn.com/abstract=2978914 or http://dx.doi.org/10.1111/ecot.12127

Alin Marius Andries (Contact Author)

Alexandru Ioan Cuza University - Faculty of Economics and Business Administration ( email )

Bd. Carol I no.22
Iasi, RO-700505
Romania

Martin Brown

University of St. Gallen ( email )

Unterer Graben 21
St. Gallen, CH-9000
Switzerland

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