The Riskiness of Credit Allocation and Financial Stability

Medientyp: E-Book

Titel: The Riskiness of Credit Allocation and Financial Stability

Beteiligte: Brandao-Marques, Luis [VerfasserIn]; Chen, Qianying [Sonstige Person, Familie und Körperschaft]; Raddatz, Claudio [Sonstige Person, Familie und Körperschaft]; Vandenbussche, Jerome [Sonstige Person, Familie und Körperschaft]; Xie, Peichu [Sonstige Person, Familie und Körperschaft]

Erschienen: [S.l.]: SSRN, [2019]

Umfang: 1 Online-Ressource (40 p)

Sprache: Englisch

DOI: 10.2139/ssrn.3482290

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Anmerkungen: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 2019 erstellt

Beschreibung: We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)'s ISS indicator, helps predict downside risks to GDP growth and systemic banking crises, two to three years ahead. Our analysis indicates that the riskiness of credit allocation is both a measure of corporate vulnerability and of investor sentiment. Economic forecasters wrongly predict a positive association between the riskiness of credit allocation and future growth, suggesting a flawed expectations process

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