Capital flows drive credit growth and banking crises, impacting global economies.
The article examines how money moving between countries affects credit growth and banking crises. They found that when a lot of money comes into a country, it leads to more lending and sometimes too much lending. Both foreign money and high levels of local lending can lead to banking crises. This shows that both global money movements and local lending play a role in causing banking problems. The study suggests that countries should be careful about allowing too much foreign money in and having too much local lending.