Abstract

In this article we try to identify potential sources of credit cyclicality. Unfortunately, contemporary models of the credit cycle are paying insuffiecent attention to this issue. The substitution of notions occurs quite often and reveals itself as a serious theoretical flaw. For example, in some studies the mechanism is accepted as the source of credit cyclicity. In some cases, factors of cyclical fluctuations are recognized as the main cause of such credit dynamics. Using the terminological approach, we carried out a comparative analysis of potential sources of the credit cycle, proposed in the literature on the issue. As the result of the study we offer to determine the source of the credit cycle as its basis - an element, without which changes in supply and demand for credit cannot be inherently cyclical in nature. In our opinion the sources of this phenomenon can be found in bounded rationality of lenders and borrowers, and in uncertainty of economic conditions. This approach allows us to determine the core of the credit cycle, as a mechanism of credit risk oscillations in the short-term and medium-term periods. This approach also allows us to successfully solve the theoretical controversy regarding the nature of the credit cycle, existing in the modern literature on the issue.

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