The Non-Bank Credit Cycle
33 Pages Posted: 8 Aug 2018 Last revised: 21 Oct 2018
Date Written: October 17, 2018
We investigate the cyclical properties of non-bank credit and its relevance for financial stability. We construct a measure of non-bank credit for a large sample of countries and find that its cyclical properties differ from those of bank credit. Non-bank credit cycles are highly correlated with bank credit cycles in some countries but not in others. Moreover, non-bank credit cycles are less synchronised than bank credit cycles across countries. Finally, non-bank credit cycles could act as a leading indicator for currency, but not for systemic banking, crises. The opposite is true for bank credit cycles. These findings highlight the value added of monitoring non-bank credit.
Keywords: non-bank credit, credit cycle, leading indicator, financial crisis
JEL Classification: G01, G23, F34
Suggested Citation: Suggested Citation