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Riding the wave of credit: Are longer expansions really a bad omen?

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journal contribution
posted on 21.10.2019, 12:53 by Vitor CastroVitor Castro, Rodrigo Martins
Some studies argue that credit booms that end up in banking crises are usually longer than those that end without creating havoc. However, they do not test this hypothesis empirically. This paper employs a duration model to assess the relationship between the length of credit booms and their outcome. The empirical analysis shows that credit expansions that end in banking crisis are indeed more prone to last longer than those that end softly. Furthermore, differences in length patterns are found to start in the build-up phase, extending to the unwinding phase of credit cycles.

History

School

  • Business and Economics

Department

  • Economics

Published in

Open Economies Review

Volume

31

Pages

729–751

Publisher

Springer

Version

VoR (Version of Record)

Rights holder

© The Authors

Publisher statement

This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.

Acceptance date

14/10/2019

Publication date

2019-12-04

Copyright date

2020

ISSN

0923-7992

eISSN

1573-708X

Language

en

Depositor

Dr Vitor Castro. Deposit date: 21 October 2019

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