Suchergebnisse

Credit procyclicality has recently been the focus of considerable attention,
but what fuels the often excessive credit growth is rarely questioned. We
investigate the relationship between the composition of banks? liabilities
and their credit procyclicality. After examining the macroeconomic context
where banks rely increasingly on wholesale funding (WSF), we estimate the
effect of WSF on the banks? credit growth using quarterly panel data for the
commercial banks of Korea from 2000 to 2011. We find that a higher
sensitivity of banks? WSF to the business cycle leads to an excessive
response of credit growth to the business cycle, even with a low share of WSF
on bank liabilities. On the other hand, we find that overseas WSF has a more
marked effect on credit procyclicality, which may additionally exacerbate the
financial fragility of export-led emerging economies.