Canh Phuc Nguyen

School of Banking, University of Economics Ho Chi Minh City,

Vietnam

Canhnguyen@ueh.edu.vn

Institutions, economic openness and credit cycles: An international evidence

Christophe Schinckus

School of Accounting and Finance, Taylor’s University, 

Malaysia

Christophe.schinckus@taylors.edu.my

Su Dinh Thanh

School of Public Finance, University of Economics Ho Chi Minh City,

Vietnam

Dinhthanh@ueh.edu.vn

Felicia Hui Ling Chong

School of Accounting and Finance, Taylor’s University, 

Malaysia

HuiLing.Chong@taylors.edu.my

Abstract. This study aims at investigating the influence of institutions and economic openness on credit cycles in a global sample. Six institutional quality indicators combined with net inward FDI and trade openness are collected to estimate, respectively, the effects of institutions and economic openness on credit cycles. Our panel data covers 60 economies, including 32 low- and middle-income economies (LMEs) and 28 high-income economies (HIEs), the data ranging between 2003 and 2017. Although better institutions tend to stimulate credit growth, they significantly stabilize credit cycles. These findings are documented with significant results in LMEs while it is less obvious in HIEs.

Received: January, 2020

1st Revision: August, 2020

Accepted: November, 2020

DOI: 10.14254/2071-8330.2020/13-4/16

JEL Classification: E02, E51, F13, F21, H81

Keywords: institutional quality, FDI, trade openness, credit cycles