Revisiting the relationship between cross-border capital flows and credit

A broad perspective on the sectoral composition of the domestic borrower and recipients of capital flows is needed to deepen the understanding of the mechanisms through which cross-border capital flows interact with credit provision. Exploring this detail reveals stark differences across (i) credit measures that include only lending by banks and those that encompass all lenders (ii) the sum of all private borrower sectors versus nonfinancial corporation and household credit (iii) advanced economies and emerging markets (iv) instrument and sectoral composition of flows.