Credit buildups and the stock market in four East Asian economies

► We examine links between banks, stock markets, and real activity for four East Asian economies. ► The study uses quarterly data from 1995 to 2010, covering two financial crises. ► VAR and VECM models show that credit buildups can negatively affect real activity. ► Stock markets may absorb credit buildups and avoid a “saturation” of credit. ► Well functioning stock markets promoted growth in these economies.