Credit expansion could dampen growth in EMEs – BIS bulletin
Shift in lending from manufacturing and into real estate is also affecting productivity
Increased private credit and the shift in loan flows away from manufacturing and towards construction and real estate have dampened growth in emerging markets, the latest BIS bulletin reveals.
The authors – Ryan Banerjee, Aaron Mehrotra and Fabrizio Zampolli – say an increase in private credit boosts growth initially in emerging market economies (EMEs). However, they add that the effects wear off as a country’s credit-to-GDP ratio reaches around 100%.
The study says EMEs’ relative stability
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