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Domestic Credit Growth and International Capital Flows *
Author(s) -
Lane Philip R.,
McQuade Peter
Publication year - 2014
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/sjoe.12038
Subject(s) - economics , boom , capital flows , capital (architecture) , monetary economics , equity (law) , international economics , market economy , geography , liberalization , archaeology , environmental engineering , political science , law , engineering
During the pre‐crisis period, Europe experienced substantial cross‐country variation in domestic credit growth and cross‐border capital flows. We investigate the inter‐relations between domestic credit growth and international capital flows during the period 1993–2008, with a special focus on the boom period of 2003–2008. 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.