tailieunhanh - An equilibrium level of credits in the economy of Kazakhstan

The article was conducted to assess equilibrium level of credit-to-GDP ratio. The research is based on the fundamental macroeconomic indicators and international comparisons of the similar sized economies. In addition, the paper presents a set of econometric methods for estimating the influence of supply and demand factors on the dynamics of credit aggregates. Namely, the Error Correction Model and Hodrick-Prescott filter were applied, since they are suitable tools to assess long-term relationships between credit demand and supply as well as they can adequately assess the level of credit in the economy. In conclusion, it appears that the current level of this indicator in Kazakhstan is likely to be close to equilibrium or slightly lower it. | Journal of Applied Finance Banking vol. 9 no. 1 2019 27-39 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2019 An equilibrium level of credits in the economy of Kazakhstan Shalkar Baikulakov1 Abstract The article was conducted to assess equilibrium level of credit-to-GDP ratio. The research is based on the fundamental macroeconomic indicators and international comparisons of the similar sized economies. In addition the paper presents a set of econometric methods for estimating the influence of supply and demand factors on the dynamics of credit aggregates. Namely the Error Correction Model and Hodrick-Prescott filter were applied since they are suitable tools to assess long-term relationships between credit demand and supply as well as they can adequately assess the level of credit in the economy. In conclusion it appears that the current level of this indicator in Kazakhstan is likely to be close to equilibrium or slightly lower it. JEL classification numbers E51 C23 G01 Keywords Credit Equilibrium level Error correction model Hodrick Prescot filter. 1 Introduction The credit to GDP ratio is useful tool to assess the adequate level of credit in the economy. In general credit leads to an increase in spending also increasing income levels in the economy. This leads to higher GDP and thereby faster productivity growth. If credit is consumed to purchase productive resources it helps to economic growth and increases the national income. Credit further leads to the creation of debt cycles Mitchell A. and Raghuram G. 1994 . A deep understanding of the actions taking place in credit market is 1 Henley Business School Reading University. Article Info Received August 14 2018. Revised September 11 2018 Published online January 1 2019 28 Shalkar Baikulakov important for the development and implementation of effective monetary and macro prudential strategies. Shocks in the demand and supply of loans have different effects on economic activity and therefore .