No ‘significant' correlation between declining bank credit and growth, BIS paper finds
A slowdown in lending to the private sector will not necessarily constrain economic recovery once output has bottomed out following a financial crisis, argues a working paper by the Bank for International Settlements (BIS).
On examining data from 39 financial crises – all preceded by credit booms – authors Előd Takáts and Christian Upper found that a change in bank credit – either in real terms or relative to GDP – "consistently did not correlate with growth during the first two years of the
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