Bank Credit During the 2008 Financial Crisis

This paper empirically estimates the main determinants of bank credit growth during the 2008 financial crisis. Using a sample covering over 80 countries, this paper finds that larger bank credit booms prior to the crisis and lower GDP growth of trading partners are among the most important determinants of the post-crisis bank credit slowdown. Structural variables such as financial depth and integration were also relevant. Finally, countercyclical monetary policy and liquidity played a critical role in alleviating bank credit contraction after the 2008 financial crisis, suggesting that countries should pursue appropriate institutional and macroeconomic frameworks conducive to countercyclical monetary policies.Bank credit;Banking systems;Credit expansion;Economic growth;Economic models;Global Financial Crisis 2008-2009;Liquidity;money market, banking, monetary policy, banking system, inflation, counter-cyclical monetary policy, central bank, return on equity, cyclical monetary policy, monetary fund, interbank market, bank performance, return on assets, monetary policies, counter-cyclical monetary policies, cyclical monetary policies, banking sector, bank balance sheets, bank stock, international liquidity, bank policy, country comparison, bank ownership, bank lending, bank profitability, banking theory, banking industry