Private credit spillovers and economic growth: Evidence from BRICS countries

This paper explores cross-country evidence of the effects of private credit shocks on economic growth. It employs a Global Vector Autoregressive (GVAR) model, which allows us to capture the dynamics of this relationship in a multi-country setting, and connects countries through bilateral international trade. Given the progressive role that Brazil, Russia, India, China and South Africa (BRICS) play in the world economy, this paper focuses on whether private credit shocks in one BRICS member state affects economic growth in the other BRICS. To this end, the paper finds empirical evidence that credit to the private sector has a positive spillover effect on growth in some of the BRICS countries, specifically in China and India. Policy implications of findings are discussed.