Colombian paper flags danger from abnormal credit growth

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Banks suffer from "inter-temporal short-sightedness", chasing short term gains from credit growth and ignoring the damaging longer-term consequences, a working paper published by the Central Bank of Colombia on April 12 finds.

The authors of Loans Growth and Banks' Risk: New Evidence, Juan Sebastián Amador, José Gómez-González, Andrés Murcia Pabón examine data on Colombian financial institutions from 1990-2011, finding that "sustained abnormal loan growth" was one of the most significant

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