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Domestic credit growth and international capital flows

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  • Lane, Philip R.
  • McQuade, Peter

Abstract

Europe experienced substantial cross-country variation in domestic credit growth and cross border capital flows during the pre-crisis period. We investigate the inter-relations between domestic credit growth and international capital flows over 1993-2008, with a special focus on the 2003-2008 boom period. We establish that domestic credit growth in European countries is strongly related to net debt inflows but not to net equity inflows. This pattern also holds for an extended sample of 54 advanced and emerging economies. JEL Classification: E51, F32, G15

Suggested Citation

  • Lane, Philip R. & McQuade, Peter, 2013. "Domestic credit growth and international capital flows," Working Paper Series 1566, European Central Bank.
  • Handle: RePEc:ecb:ecbwps:20131566
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    References listed on IDEAS

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    More about this item

    Keywords

    financial globalisation; Financial Stability; macro-prudential regulation;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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