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Asymmetric Effects of Credit Growth on the Current Account Balance: Panel Data Evidence

  • Mehmet Fatih EkinciEmail author
  • Tolga Omay
Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)

Abstract

Expanding current account balances (both surpluses and deficits) prior to the global economic crisis dominated academic and policy debates over the past decade. Understanding the role of credit growth on the current account balance has become a priority particularly with the rebalancing experience in the post-crisis period. In this study, we adopt a comprehensive framework by constructing an empirical model that accommodates asymmetric adjustments of current account balance to the changes in the total and household credit growth. We consider the asymmetric effects in two dimensions. When we discriminate between credit expansion and contraction episodes, our results show that credit growth has a stronger negative impact on the current account balance during credit expansion periods. Furthermore, negative effects of total and household credit growth on the current account balance are more pronounced during current account deficit episodes.

Keywords

Credit growth Current account balance Loan Growth  Global imbalances Household credit Panel data econometrics 

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Department of EconomicsAtilim UniversityAnkaraTurkey

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