02171cas a2200301 a 4500 AALejournalIMF022700 230101c9999 xx r poo 0 0eng d 20.00 USD 9781513513775 1018-5941 BD-DhAAL BD-DhAAL Brandao Marques, Luis. The Riskiness of Credit Allocation and Financial Stability / Luis Brandao Marques, Qianying Chen, Claudio Raddatz, Jerome Vandenbussche. Washington, D.C. : International Monetary Fund, 2019. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)'s ISS indicator, helps predict downside risks to GDP growth and systemic banking crises, two to three years ahead. Our analysis indicates that the riskiness of credit allocation is both a measure of corporate vulnerability and of investor sentiment. Economic forecasters wrongly predict a positive association between the riskiness of credit allocation and future growth, suggesting a flawed expectations process. Mode of access: Internet Chen, Qianying. Raddatz, Claudio. Vandenbussche, Jerome. IMF Working Papers; Working Paper ; No. 2019/207 Full text available on IMF https://elibrary.imf.org/openurl?genre=book&isbn=9781475506969 IMF e-Library Full text available on IMF https://elibrary.imf.org/openurl?genre=book&isbn=9781513598789 IMF e-Library Full text available on IMF https://elibrary.imf.org/openurl?genre=journal&issn=1018-5941&volume=2019&issue=207 IMF e-Library