PIGS (economics)

Liquidity transformation and Eurosystem credit operations

Retrieved on: 
Thursday, April 25, 2024
Appendix, Central bank, Interaction, A.1, Research Papers in Economics, Coincidence, ACC, Style (visual arts), Policy, CQS, PDF, Next, PIGS (economics), R2, ECB, Risk, L2, ABS, Section 4, Social science, E52, JEL, Section 3, COVID-19, The Journal of Finance, Elasticity, Bias, Classification, Overalls, LTR, Credit, MFI, Literature, Creditor, Public sector, FX, UBB, Section 2, European Central Bank, EUR, C23, Pressure, LOLR, Chapter Two, Section 5, MPO, Rest, Reproduction, Website, Fahd of Saudi Arabia, RHS, Abstract, LCR, Capital Requirements Regulation 2013, National bank, Government, Interval (mathematics), Security (finance)
Key Points: 

    How credit is allocated during booms can predict busts

    Retrieved on: 
    Monday, June 26, 2023
    Database, Bank for International Settlements, BIS, Housing, IMF, Bank statement, National university, MIT Sloan School of Management, Research, History, Gross domestic product, GDP, Restaurant, Risk, PIGS (economics), Proposed long-term solutions for the eurozone crisis, International Monetary Fund, Thailand and the International Monetary Fund, Bank, Health, Credit, Verner, Tourism, Security (finance), Cryptocurrency

    CAMBRIDGE, Mass., June 26, 2023 /PRNewswire/ -- Across history, some bursts of lending to companies and individuals, or so-called "credit booms," have led to busts, while others haven't. In a new study, MIT Sloan School of Management assistant professor of Finance Emil Verner and assistant professor of finance Karsten Müller from the National University of Singapore Business School, teased apart types of lending and discovered that how capital is allocated during a credit boom matters to the economy's ultimate health.

    Key Points: 
    • CAMBRIDGE, Mass., June 26, 2023 /PRNewswire/ -- Across history, some bursts of lending to companies and individuals, or so-called "credit booms," have led to busts, while others haven't.
    • "If you're worried about financial stability risks, then one of the best predictors is these credit booms or bubbles where credit is going toward these non-tradable sectors.
    • They found that, overall during times of easy credit, credit flows disproportionately to the non-tradable sector.
    • Policymakers should understand that how credit is allocated during booms impacts the path of GDP, housing prices, and the likelihood of systemic banking crises.