The impact of real estate, inequality and current account imbalances on excessive credit: A cross country analysis Report as inadecuate




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Abstract

The numerous financial crises in the 20th and 21st century demonstrate the role of excessive creditas the main instigator of financial crises. Could this excessive credit be natural byproducts oflingering economic ailments such as, income inequality, property bubbles and persistent currentaccount imbalances? This study attempts to answer this question by applying the Least SquaresDummy Variable LSDVC and dynamic GMM estimations based on the data of ten countriesfrom the year 2004 to 2012. Whilst past literature have investigated the effect of incomeinequality, dominant real estate sector and current account imbalances on excessive creditseparately, this study extends the literature by examining the impact of all three variables onexcessive credit aggregately. Our findings tend to indicate that there do exist a positiverelationship between all three variables and excessive credit. However, we found that only incomeinequality and the real estate sector contribute significantly to excessive credit but currentaccount imbalances only marginally do so. We also discovered that the contribution to excessivecredit by the banking sector is just about twice the amount of all three variables combined. Ourresults serve as evidence for policymakers interested in reducing excessive credit by controllingall three variables as well as the banking sector.



Item Type: MPRA Paper -

Original Title: The impact of real estate, inequality and current account imbalances on excessive credit: A cross country analysis-

English Title: The impact of real estate, inequality and current account imbalances on excessive credit: A cross country analysis-

Language: English-

Keywords: Excessive Credit, Inequality, Real Estate, Current Account Imbalances, Credit-to-GDP Gap.-

Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion ProcessesC - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C58 - Financial EconometricsE - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the MacroeconomyG - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets-





Author: Halim, Asyraf Abdul

Source: https://mpra.ub.uni-muenchen.de/72093/



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