Equity price growth rate ‘leading indicator’ of bank loans, French paper argues

banque-de-france
The Banque de France

Observers and forecasters of the rate of loan issuance in their domestic banking sectors should pay close attention to the rate of growth of equity prices, according to a working paper published this month by the Banque de France.

In Explaining and forecasting bank loans. Good times and crisis, Grégory Levieuge creates two models to explain and forecast bank loans to non-financial companies, both in normal circumstances and during turbulent periods.

The first model is a simple vector auto

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