What Drives Credit Growth in Emerging Asia?
Electronic Access:
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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.
Series:
Working Paper No. 12/43
Subject:
Credit booms Credit expansion Cross country analysis Economic models Emerging markets Flexible exchange rates Monetary policy Shock identification
English
Publication Date:
February 1, 2012
ISBN/ISSN:
9781463936440/1018-5941
Stock No:
WPIEA2012043
Format:
Paper
Pages:
43
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