November 2018

The Non-Bank Credit Cycle

Esti Kemp, René van Stralen, Alexandros Vardoulakis, and Peter Wierts


We investigate the cyclical properties of non-bank credit and its relevance for financial stability. We construct a measure of non-bank credit for a large sample of countries and find that its cyclical properties differ from those of bank credit. Non-bank credit cycles are highly correlated with bank credit cycles in some countries but not in others. Moreover, non-bank credit cycles are less synchronised than bank credit cycles across countries. Finally, non-bank credit cycles could act as a leading indicator for currency, but not for systemic banking, crises. The opposite is true for bank credit cycles. These findings highlight the value added of monitoring non-bank credit.
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Keywords: Credit cycle, financial crisis, leading indicator, non-bank credit


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Last Update: January 09, 2020