The Relationship Between Credit and Business Cycles in Central America and the Dominican Republic

Resumen

The purpose of this study is to provide evidence of the relationship between credit and real activity in Central America and the Dominican Republic (hereafter DR). We address the empirics of the link between credit and real activity for the case of a group of developing countries with limited financial markets where bank credit is the main source of external finance for the private sector. There has been a rise on empirical literature analizing this phenomena in developed and emerging countries, but with little attention to small developing economies. This paper seeks to fill that void in the literature.