Lower growth follows credit booms with high-yield lending – paper

imf-hq
The IMF

Credit booms fuelled by high-yielding bonds are more likely to create long periods of weak economic growth than expansions boosted by better credit conditions, says research published by the International Monetary Fund.

Lending standards and output growth by Divya Kirti bases its analysis on the quality of lending in the bond markets of 38 countries since the 1980s. “The main finding of the paper is that lending standards do help separate good credit booms from bad booms,” says Kirti.

Yields

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