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Working Papers

Financial Cycles and Credit Growth Across Countries

Coimbra, N, Rey, H
Date Published: Forthcoming

Abstract:
In Coimbra and Rey (2017) we develop a dynamic macroeconomic model with heterogeneous financial intermediaries and endogenous entry. It features time-varying endogenous macroeconomic risk that arises from the risk-shifting behaviour of financial intermediaries. We test empirically in a broad panel of countries the implication that credit creation is more elastic to funding costs when the distribution of leverage in the banking system is more positively skewed.



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Rey thanks the ERC for financial support.




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