Abstract
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•  See how credit supply shock drives real economic activity cycles
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•  Credit market dynamics explain slowing growth of GDP, credit and capital formation
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•  Adverse credit demand contributions slow economic activity
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•  Credit demand shocks contributions elevate and depress credit growth and capital formation
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•  Sovereign bond yields impact credit supply shock contributions to GDP
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•  High government bond yields impact credit supply conditions
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Notes
- 1.
As proxied by non-performing loans (NPLs).
- 2.
The credit supply shock based on Fig. 12.1 differs from a monetary policy shock. The monetary policy shock leads to a decrease in interest rates in the short run. Aggregate demand and supply will induce increased demand for loans leading to an increase in loan quantities and lending rates.
References
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Bijsterbosch, M., & Falagiarda, M. (2015). The macroeconomic impact of financial fragmentation in the euro area: Which role for credit supply? Journal of International Money and Finance, 54(C), 93–115.
Cantero-Saiz, M., Sanfilippo-Azofra, S., Torre-Olmo, B., & López-Gutiérrez, C. (2014). Sovereign risk and the bank lending channel in Europe. Journal of International Money and Finance, 47(C), 1–20.
Gambetti, L., & Musso, A. (2012). Loan supply shocks and the business cycle (Working paper series 1469). Frankfurt: European Central Bank.
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Gumata, N., Ndou, E. (2017). Credit Supply Shocks and Real Economic Activity. In: Bank Credit Extension and Real Economic Activity in South Africa. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-43551-0_12
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DOI: https://doi.org/10.1007/978-3-319-43551-0_12
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