Is Credit Easing Viable in Emerging and Developing Economies? An Empirical Approach

During the global financial crisis, many central banks in advanced economies engaged in credit easing. These policies have been perceived as largely successful in reducing stress in financial markets, thus avoiding larger output losses. In this paper, we study empirically whether credit easing is al...

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Bibliographic Details
Main Author: Jácome, Luis
Other Authors: Saadi Sedik, Tahsin, Ziegenbein, Alexander
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2018
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Is Credit Easing Viable in Emerging and Developing Economies? An Empirical Approach  |c Luis Jácome, Tahsin Saadi Sedik, Alexander Ziegenbein 
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300 |a 42 pages 
651 4 |a United Kingdom 
653 |a Economic & financial crises & disasters 
653 |a Inflation 
653 |a Financial crises 
653 |a Currency; Foreign exchange 
653 |a Monetary economics 
653 |a Systemic crises 
653 |a Deflation 
653 |a Exchange rate adjustments 
653 |a Caribbean 
653 |a Monetary expansion 
653 |a Economic History: Financial Markets and Institutions: Latin America 
653 |a Price Level 
653 |a Foreign Exchange 
653 |a Banks and Banking 
653 |a Financial Markets and the Macroeconomy 
653 |a Prices 
653 |a Macroeconomics 
653 |a Banking crises 
653 |a Monetary policy 
653 |a Central Banks and Their Policies 
653 |a Monetary Policy 
653 |a Money and Monetary Policy 
653 |a Foreign exchange 
653 |a Financial Crises 
700 1 |a Saadi Sedik, Tahsin 
700 1 |a Ziegenbein, Alexander 
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520 |a During the global financial crisis, many central banks in advanced economies engaged in credit easing. These policies have been perceived as largely successful in reducing stress in financial markets, thus avoiding larger output losses. In this paper, we study empirically whether credit easing is also a viable policy tool to cope with banking crises in emerging and developing economies. We find that credit easing leads to a sharp increase in domestic currency depreciation, high inflation, and a substantial reduction in economic growth in a large panel of emerging and developing economies. For advanced economies, we find the effects to be benign. Our results suggest that emerging and developing economies should be cautious when using credit easing as it may fuel adverse macroeconomic repercussions