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Political and institutional determinants of credit booms

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posted on 2018-12-12, 09:49 authored by Vitor CastroVitor Castro, Rodrigo Martins
The literature that investigates credit booms has essentially focused on their economic determinants. This paper explores the importance of political conditionings and central bank independence and provides some striking findings on this matter. Estimating a fixed effects logit model over a panel of developed and developing countries for the period 1975q1-2016q4, we find that credit booms are less likely when right-wing parties are in office, especially in developing countries, and when there is political instability. However, they have not proven to depend on the electoral cycle. More independent Central Banks are also found to reduce the probability of credit booms. Moreover, they seem to be more likely to occur and spread within a monetary union.

History

School

  • Business and Economics

Department

  • Economics

Published in

Oxford Bulletin of Economics and Statistics

Volume

81

Issue

5

Pages

1144 - 1178

Citation

CASTRO, V. and MARTINS, R., 2018. Political and institutional determinants of credit booms. Oxford Bulletin of Economics and Statistics, 81 (5), pp.1144-1178.

Publisher

Wiley © The Department of Economics, University of Oxford and John Wiley & Sons Ltd.

Version

  • AM (Accepted Manuscript)

Publisher statement

This is the peer reviewed version of the following article: CASTRO, V. and MARTINS, R., 2018. Political and institutional determinants of credit booms. Oxford Bulletin of Economics and Statistics, 81 (5), pp.1144-1178, which has been published in final form at https://doi.org/10.1111/obes.12290. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

Acceptance date

2018-11-27

Publication date

2018-12-31

ISSN

0305-9049

eISSN

1468-0084

Language

  • en

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