Publication: Who Gets the Credit? And Does It Matter? Household vs. Firm Lending across Countries
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2008-07
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2012-06-01
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Abstract
While the theoretical and empirical finance literature has focused almost exclusively on enterprise credit, about half of credit extended by banks to the private sector in a sample of 45 developing and developed countries is to households. The share of household credit in total credit increases as countries grow richer and financial systems develop. Cross-country regressions, however, suggest a positive and significant impact on gross domestic product per capita growth only of enterprise but not household credit. These two findings together partly explain why previous studies have found a small or insignificant effect of finance on growth in high-income countries. In addition, countries with a lower share of manufacturing, a higher degree of urbanization, and more market-oriented financial systems have a higher share of household credit. It is thus mostly socio-economic trends that determine credit composition, while policies influencing banking market structure and regulatory policies are not robustly related to credit composition.
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“Büyükkarabacak, Berrak; Beck, Thorsten; Rioja, Felix; Valev, Neven. 2008. Who Gets the Credit? And Does It Matter? Household vs. Firm Lending across Countries. Policy Research Working Paper No. 4661. © World Bank. http://hdl.handle.net/10986/6855 License: CC BY 3.0 IGO.”
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