Description

The purpose of this paper is to empirically study the macroeconomic, structural and banking determinants of bank credit growth in the wake of the 2008 financial crisis. Using standard cross- section econometric techniques on a sample covering over 80 countries, analyzed in the period from January 2002 to May 2009, this paper finds that larger bank credit booms in the 24 months before the crisis and lower GDP growth of main tradin g partners after are among the most relevant determinants of the post-crisis bank credit slowdown. Structural variables such as financial depth and integration were also importa nt determinants of bank credit gr owth after the crisis. Finally, countercyclical monetary policy and liquidity play ed a critical role in alleviating bank credit contraction after the 2008 financial crisis, suggesting that countries should pursue appropriate institutional and macroeconomic frameworks conduc ive to countercyclical monetary policies.