Property debt overhang: The case of Irish SMEs

Fergal McCann, Tara McIndoe-Calder 23 September 2014

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The detrimental impact of credit and property boom-bust cycles on consumption and growth has received much high-profile attention in the aftermath of the Global Crisis (Mian and Sufi 2013, 2014, Dynan et al. 2012). Separately, an empirical literature on non-financial corporates has shown that debt overhang can negatively impact firm investment (Aivazian et al. 2005, Cai and Zhang 2011, Coricelli et al. 2012).

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Topics:  Financial markets

Tags:  debt overhang, debt, Ireland, Small and medium enterprises, capital allocation, credit booms, credit, asset price bubbles, housing bubble, property bubble

Political booms, financial crises: Why popular governments are not always a good sign

Christoph Trebesch, Helios Herrera, Guillermo L. Ordoñez 06 September 2014

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Financial crises: the search for early warning indicators

Financial crises are a recurrent phenomenon in the history of emerging markets and advanced economies alike. To understand the common causes of these crises and to prevent future ones from developing, economists have a long tradition of studying early warning indicators. Two well-documented predictors of financial crises are credit booms and capital flow bonanzas.

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Topics:  Financial markets Politics and economics

Tags:  credit booms, financial crisis, politics, emerging markets, capital flows, public opinion, popularity

Managing credit bubbles

Alberto Martin, Jaume Ventura 05 July 2014

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Credit markets play an increasingly central role in modern economies. Within the OECD, for instance, domestic credit has risen from 100% of GDP in 1970 to approximately 160% of GDP in 2012 (as measured by the Bank for International Settlements). To be sure, this growth masks large variations across countries and over time, but there is a common feature to all these different country experiences that stands out. Credit has often alternated between ‘booms’ – periods of rapid growth – and ‘busts’ – periods of stagnation or significant decline.

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Topics:  Financial markets Macroeconomic policy

Tags:  credit booms, lender of last resort, bubbles, credit, Leaning against the wind, collateral, financial accelerator

The puzzling pervasiveness of dysfunctional banking

Charles W Calomiris interviewed by Romesh Vaitilingam,

Date Published

Fri, 03/21/2014

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See Also

Calomiris, C W and S H Haber (2014), Fragile by Design: The Political Origins of Banking Crises and Scarce Credit, Princeton University Press.

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Topics

Financial markets
Tags
credit booms, banking, banks, systemic risk, recapitalisation, Eurozone crisis, Bank credit, bank capital

Related Article(s)

The limits to partial banking unions The AQR and stress testing the European banking system Banking union for Europe – where do we stand? Eastern European credit crunch and foreign bank funding Bank credit during the global crisis: A cross-country comparison
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Why fiscal sustainability matters

Willem Buiter 10 January 2014

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Does fiscal sustainability matter only when there is a fiscal house on fire, as was the case with the Greek sovereign insolvency in 2011–12? Far from it.

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Topics:  Financial markets Global crisis International finance Macroeconomic policy

Tags:  eurozone, sovereign debt, capital flows, financial crisis, credit booms, fiscal policy, emerging markets, global financial crisis, banking, banks, Eurozone crisis, Currency wars, fiscal sustainability, banking union, sovereign debt restructuring, balance-sheet recession

Gross inflows and the incidence of credit booms

César Calderón, Megumi Kubota 16 December 2012

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Foreign flows into emerging market economies have surged in the post-crisis period. The surge in gross inflows has come alongside a rapid creation of credit, an excessive increase in stock and housing prices and continued pressure towards further appreciation of the currency in emerging market economies. These developments have reignited the debate on capital inflow management.

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Topics:  Global crisis International finance

Tags:  credit booms, global crisis, gross inflows

Bank credit during the 2008 financial crisis: A cross-country comparison

Ari Aisen, Michael Franken 28 May 2010

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Rarely has an episode of financial turmoil generated such economic havoc as the 2008 financial crisis. The wealth destruction was unique – estimated at $50 trillion, the equivalent to one year of world GDP (Loser 2009) – which resulted from the plunge in the value of stocks, bonds, property, and other assets. The crisis was unprecedented in its global scale, synchronicity, and severity. It hindered credit access to businesses, households, and banks – and choked economic activity.

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Topics:  Global crisis International finance

Tags:  credit booms, global crisis, Bank credit

Credit booms go wrong

Alan Taylor, Moritz Schularick 08 December 2009

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The financial crisis of 2008–09 has reignited interest in understanding the crucial roles money and credit play in the creation, propagation, and amplification of economic shocks. Such research on the importance of financial structure promises to reopen a number of fundamental fault lines in modern macroeconomic thinking.

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Topics:  Economic history Macroeconomic policy

Tags:  credit booms, global crisis, money

The US subprime mortgage crisis: A credit boom gone bad?

Giovanni Dell'Ariccia, Luc Laeven, Deniz Igan 04 February 2008

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Recent events in the market for mortgage-backed securities have placed the US subprime mortgage industry in the spotlight. Over the last decade, this market has expanded dramatically, evolving from a small niche segment into a major portion of the overall US mortgage market. Can the recent market turmoil – triggered by the sharp increase in delinquency rates – be related to this rapid expansion? In other words, is the recent experience, in part, the result of a credit boom gone bad?

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Topics:  Financial markets

Tags:  Subprime, subprime crisis, subprime mortgage lending, credit booms, mortgage market

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