IMF Working Papers

What Drives Credit Growth in Emerging Asia?

By Fei Han, Selim A Elekdag

February 1, 2012

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Fei Han, and Selim A Elekdag. What Drives Credit Growth in Emerging Asia?, (USA: International Monetary Fund, 2012) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper seeks to uncover the main drivers of credit growth in emerging Asia using a multi-country structural vector autoregressive (SVAR) model. Taking a novel approach, we developed a two-block SVAR whereby shocks within blocks are identified using sign restrictions, whereas shocks across the blocks are identified using a recursive (block-) Cholesky structure. We find that domestic factors are more dominant than external factors in driving rapid credit growth in emerging Asia. This is particularly true for domestic monetary policy, which can play a pivotal role in terms of managing rapid credit growth in emerging Asia.

Subject: Credit, Credit booms, Econometric analysis, Exchange rate flexibility, Financial services, Foreign exchange, Money, Short term interest rates, Structural vector autoregression

Keywords: Aggregate demand, Aggregate demand demand shock, Asia and Pacific, Bayesian estimation, Credit, Credit boom, Credit booms, Credit booms, Credit dynamics, Credit growth, Credit shock, EMAS credit variation, EMAS monetary policy, Emerging Asia, Europe, Exchange rate flexibility, Global, Monetary policy, Monetary policy shock, Rapid credit growth, Shock identification, Short term interest rates, Sign restrictions, Structural vector autoregression, SVAR, WP

Publication Details

  • Pages:

    43

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2012/043

  • Stock No:

    WPIEA2012043

  • ISBN:

    9781463936440

  • ISSN:

    1018-5941

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