Foreign-funded loans fuel credit booms – DNB paper

Netherlands Bank
The Netherlands Bank
Rachael King

Credit booms, especially in emerging economies, are significantly driven by an increase in foreign-funded credit (FFC), a working paper published by the Netherlands Bank finds.

In Foreign funded credit: funding the credit cycle? Patty Duijm looks at data from 41 countries over the period from 1985 to 2015.

The author finds that an increase in the share of FFC is associated with credit booms in both emerging and developed economies. This is true for increases in both household and business

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