I will have the great honor to make a “hands-on” seminar for the Central Bank of Suriname on February 10, 2026 (11:00 Suriname Time) on our joint research, with Sy-Hoa Ho, on growth and banking credit. I am extremely grateful to Albert Mungroo for the invitation. Stay tuned for more information.
Bank credit and economic growth: A dynamic threshold panel model for ASEAN countries
While it is widely recognized that the development of a sound financial system may contribute to foster economic growth, the relation between economic growth and financial activities is complex. In this perspective, our contribution investigates the existence of threshold effects in the relationship between economic growth and bank credit. Our sample of ASEAN countries is examined over the period spanning from 1993 to 2019. We use the approach of Kremer et al. (2013) to estimate threshold effects in a dynamic panel where a group of explanatory variables can be endogenous. Our results confirm the vanishing effect of finance on economic growth. We found a threshold of 96.5% (significant at the 5% level) for the credit-to-GDP ratio, the threshold variable. In the short run, for observations inferior or equal to the threshold, the positive effect of bank credit expansion on economic growth is around 0.08 (significant at the 1% level). Whereas, for observations superior to the threshold, the positive effect of bank credit expansion on economic growth is around 0.01, but not significant. The role of exporting firms is essential in ASEAN countries as they are more export-oriented than other regions in the world economy. Our results may indicate that the beneficiary of the credit (firms versus households), the structural features (export-led growth), and the regional heterogeneity have to be considered in empirical investigations of threshold effects in the relation between economic growth and bank credit. This empirical evidence may help to formulate sound policy recommendations.
My research has been presented in several central bank settings over the recent period, reflecting sustained engagement with policy-relevant empirical work: at the Bank of Thailand in May 2024 (during the ABD-PIER conference), the Bank of France in October 2024 (during a visiting scholar appointment), the European Central Bank in November 2024 (ECB research seminar of the Euro Area External Sector and Euro Adoption Division in the Directorate General Economics), the Bank of Finland in April 2025 (BOFIT research seminar during a visiting scholar appointment), the Bank of Korea in August 2025 (during the ABD-JIMF-BOK conference and a research seminar), the Bank of Israel (during the VIMM webinar) in September 2025, the Bank of Latvia in October 2025 (research seminar), the National Bank of Slovakia in January 2026 (research seminar), and the Bank of England in January 2026 (research seminar).
Two other seminars are planned in 2026: one at the Central Bank of the Republic of Türkiye; and the other one at the South African Reserve Bank. Stay tuned for more information.