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The impact of real estate, inequality and current account imbalances on credit intensity: a cross-country analysis

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Date
2016
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Abstract
This paper seeks to show empirical evidence on the relationship amongst excessive credit, real estate, inequality and current account imbalances by using the LSDVC estimator based on 10 countries with similar economic experiences between the years 2004 through 2012. The paper is motivated by the gap in the literature concerning this topic and the fact that there exists a myriad of previous works that demonstrate how the dominance of real estate, inequality and current account imbalances are natural side effects owing to economic growth in a country. Therefore, if a positive relationship is found to exist between excessive credit and the other three variables, then as an economy grow, the three variables would become more prominent and could subsequently result in an excessive level of credit in the economy which is found to have a strong direct link to financial crisis. The paper found a significant positive relationship amongst current account imbalance, inequality and excessive credit. Real estate is found to have a positive direct relationship, although the impact is too miniscule to be statistically significant. The findings could be used as an evidence for policy makers to undertake policies that address all three variable vis--vis their economic growth policies to mitigate the risks of future financial crises.
Keywords
Excessive credit , Inequality , Real estate , Current account imbalances , Credit-to-GDP gap , Project paper (MSc)
Citation
Abdul Halim, A. (2016). The impact of real estate, inequality and current account imbalances on credit intensity: a cross-country analysis (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/2370
Publisher
INCEIF

Available in physical copy only (Call Number: t HD 75 A861)

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