Sectoral shocks drive non-bank credit cycles – BIS paper

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

Sector-specific shocks are a major driver of credit cycles in both the bank and non-bank sectors, a working paper published by the Bank for International Settlements finds.

Authors C Bora Durdu and Molin Zhong say there had been a gap in the literature – there was little study of what drives non-bank credit cycles, interactions with bank credit and how fluctuations in credit spread to the wider economy.

The authors study the issue in a dynamic stochastic general equilibrium framework based on

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