FINANCE version of "Everybody finding fault": the tendency of the heavily indebted country with other countries which are different (Figure)

Updated: October 19, 2015  Views: 57

FX168 inquiry into this point readers may be disappointed, Citigroup (Citigroup) given in this chart covers six major developed and developing countries in global credit -GDP (gross domestic product) ratio, the measure How much economic output of a country as a support but in fact this credit metrics for each country are accelerating rise:

Alice head up this indicator for a country's economic development is not favorable.

BIS (Bank for International Settlements, BIS) said in a report released last month track in that when observed simultaneously continued rapid credit growth and the huge rise in asset prices, financial markets most likely will be unstable .

The bank is given where the logic is that the size of the rapid expansion of credit means a higher debt ratio in financial markets, the overall leverage rises, if accompanied by a substantial rise in asset prices, most of the credit funds may mean that growth was not implemented in the real economy in which case the capital market bubble, the financial crisis which will lead to banking and other financial institutions.

On this basis, BIS proposed scale of credit / GDP gap (Credit-to-GDP gap) of this indicator, from an empirical point of view to analyze the historical ratio of countries the size of credit / GDP, of which, China 1 quarter of this BIS index far beyond the normal range found in 2-10%.

Bank for International Settlements (BIS) said the increase in the size of credit in China, Brazil and Turkey, does not just mean the risk of bad debts, also indicates that the banking crisis is approaching. Percentage of credit to GDP is a measure of the extent to which the private sector from the long-term trend An important data.

BIS report said, China credit scale to GDP ratio as high as 24.5%, is higher than the value of any large economy in Turkey this ratio was 16.6%, Brazil 15.7% .BIS said:. 'Early the banking crisis warning noted that the sharp rise in credit risk is caused by the size. '

Historically, if a country credit to GDP ratio exceeds 10%, then two-thirds of likely experience 'a serious banking crisis' in three years.

But the relevant question has also been refuted domestic research institutions.

And the Bank for International Settlements State Securities announced private sector credit / GDP gap compares concludes: According to BIS describe their use of credit to the private caliber loans to non-financial sector, this caliber is not included in the government sector loans, but the central bank [Microblogging] published data do not have this caliber of data, therefore, the State Securities for different caliber of credit / GDP gap was checking.

GDP is the quarter in which the accumulated value obtained after years of on credit caliber, were selected domestic loans, non-financial enterprises and government agencies and organizations loans, household loans (retail loans) is calculated. Three quarters of total credit stock caliber values are .

State Securities after the completion of the BIS contrast credit / GDP gap exist several questions. First, the role of GDP in the credit / GDP ratio in this, mainly to eliminate the impact of the credit scale so that countries with comparable data. As credit scale molecule is an ongoing stock data is accumulated balance incremental credit history, and as the denominator of GDP a year merely reflects the value of all final goods and services, both of which exist in time not equal.

Secondly, each sector credit data released by China's central bank on a regular basis, there is no independent a government loan, and therefore the size of credit is included caliber government loans, while private sector credit BIS caliber and excluding government loans, and thus we are how to break it to non-financial enterprises and government agencies and organizations loans, there are some doubts.

Third, for developing countries, is in a lot of infrastructure construction phase, which is undoubtedly a much larger demand for credit, in part due to changes in the incremental credit is only due to the institutional environment, the national economic development the necessary credit demand, in order to determine if the excessive credit expansion and banking crises conclusions drawn, there are some sweeping misunderstanding.


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