to ‘credit traps' — prolonged periods of stagnant real activity accompanied by low productivity, financial sector … undercapitalisation, and the misallocation of credit. In our model, credit traps arise when shocks to bank equity capital tighten banks …' borrowing constraints, causing them to allocate credit to easily collateralisable but low productivity projects. Low …

This paper investigates the role of credit demand and supply shocks in driving the weakness in UK banks' lending and … vector autoregression analysis to identify separate credit demand and supply shocks in addition to the standard macroeconomic … shocks that are typically analysed in this framework. It finds that credit supply shocks can account for most of the weakness …

Recent empirical evidence on the cross-country synchronization of credit spreads in response to US monetary policy … shocks has led to the notion of an ‘international credit channel' of US monetary policy. This paper provides novel evidence … on the existence of an international credit channel for the transmission of US financial shocks across borders, and …

We investigate the role of private sector credit in shaping the severity of recessions. Using a sample of 130 downturns … in 26 advanced economies since the 1970s, we assess whether the growth or level of credit is the better predictor of the … productivity. We find that a period of rapid credit growth in the immediate run-up to a recession predicts a deeper and longer …