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Discussion Paper
The Disparate Outcomes of Bank‑ and Nonbank‑Financed Private Credit Expansions
Long-run trends in increased access to credit are thought to improve real activity. However, “rapid” credit expansions do not always end well and have been shown in the academic literature to predict adverse real outcomes such as lower GDP growth and an increased likelihood of crises. Given these financial stability considerations associated with rapid credit expansions, being able to distinguish in real time “good booms” from “bad booms” is of crucial interest for policymakers. While the recent literature has focused on understanding how the composition of borrowers helps ...