Domestic Credit Growth and International Capital Flows* |
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Authors: | Philip R. Lane Peter McQuade |
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Affiliation: | 1. Trinity College Dublin, , Dublin 2, Ireland;2. European Central Bank, DE‐60311 Frankfurt am Main, , Germany |
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Abstract: | During the pre‐crisis period, Europe experienced substantial cross‐country variation in domestic credit growth and cross‐border capital flows. We investigate the inter‐relations between domestic credit growth and international capital flows during the period 1993–2008, with a special focus on the boom period of 2003–2008. 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. |
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Keywords: | Financial globalization financial stability macroprudential regulation E51 F32 G15 |
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