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Credit Dynamics and Financial Globalisation

Published online by Cambridge University Press:  26 March 2020

Philip R. Lane
Philip R. Lane*
Affiliation:
Trinity College Dublin
*
E-mail: plane@tcd.ie
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Abstract

This paper reviews the impact of financial globalisation on credit dynamics. In particular, it argues that financial globalisation fundamentally alters credit demand and credit supply, since borrowers and lenders have foreign options as well as domestic options in terms of the selection of projects and funding sources. The rapid accumulation of large cross-border debt positions was a central feature in the boom phase of the European credit cycle during 2003–8 and has influenced the nature of the post-2008 financial crisis. Finally, the paper considers the range of policy reforms needed to improve macro-financial stability under international financial integration.

Keywords

domestic creditinternational capital flowsfinancial globalisationE42F32F41
Type
Research Articles
Information
National Institute Economic Review , Volume 225 , August 2013 , pp. R14 - R22
Copyright
Copyright © 2013 National Institute of Economic and Social Research

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Footnotes

This research was generously supported by the Institute for New Economic Thinking. I thank the referees for helpful feedback and Caroline Mehigan and Clemens Struck for research assistance.

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