Domestic Credit Growth and International Capital Flows

By Philip R. Lane, Peter D. McQuade. Social Science Research Network, 2013

332 citations recorded by the source corpus.

Europe experienced substantial cross-country variation in domestic credit growth and cross-border capital flows during the pre-crisis period. We investigate the inter-relations between domestic credit growth and international capital flows over 1993-2008, with a special focus on the 2003-2008 boom period. 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.

Subfields: Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/8ed2b3fe026975e7e1bf17a3c7df2cf6e3801b4f

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Citations in the corpus

Trilemmas and trade-offs: living with financial globalisation (2015, background): “Lane and McQuade (2014) document a link between net crossborder debt flows and domestic credit growth.”
The Impact of Geopolitical Risks on Financial Development: Evidence from Emerging Markets (2020, background): “The external balance captures the open-economy form of the credit-supply model (Takats, 2010), and it can model the effects of the relationship between other countries and the competitiveness with the world on the supply of domestic credits (Lane & McQuade, 2014).”
Breaking Free of the Triple Coincidence in International Finance (2016, background): “Extends Lane and McQuade (2014).”
Global dollar credit: links to US monetary policy and leverage (2015, unknown): “Lane and McQuade (2014) find that domestic credit growth exhibits a close relationship with net international debt flows in the European context of the 2000s in which the debt flows were denominated in domestic currency in euro area countries like Ireland, Portugal and Spain. 6 See http://www.bis.or”