Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/225336 
Year of Publication: 
2020
Series/Report no.: 
SAFE Working Paper No. 104 [rev.]
Version Description: 
April 7, 2020
Publisher: 
Leibniz Institute for Financial Research SAFE, Frankfurt a. M.
Abstract: 
Credit boom-busts are observed in experimental credit markets with perfect information, no aggregate shocks, and no speculative motive. By contrast, a stable outcome is observed in the island economy, which isolates the borrowers but is otherwise similar to the market economy. The higher willingness to pay for credit following higher market but not island interest rates is consistent with herding, which can create spiraling effects and predict a credit boom-bust.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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