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Title: Political and institutional determinants of credit booms
Authors: Castro, Vitor
Martins, Rodrigo
Keywords: Credit booms
Logit model
Political cycles
Government ideology
Central Bank independence
Issue Date: 2018
Publisher: Wiley © The Department of Economics, University of Oxford and John Wiley & Sons Ltd.
Citation: CASTRO, V. and MARTINS, R., 2018. Political and institutional determinants of credit booms. Oxford Bulletin of Economics and Statistics, doi:10.1111/obes.12290.
Abstract: 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.
Description: This paper is closed access until 31 December 2020.
Version: Accepted for publication
DOI: 10.1111/obes.12290
URI: https://dspace.lboro.ac.uk/2134/36402
Publisher Link: https://doi.org/10.1111/obes.12290
ISSN: 0305-9049
Appears in Collections:Closed Access (Economics)

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