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Who gets the credit ? and does it matter ? household vs. firm lending across countries
 
Author:Beck, Thorsten; Buyukkarabacak, Berrak; Rioja, Felix; Valev, Neven; Collection Title:Policy Research working paper ; no. WPS 4661
Country:World; Date Stored:2008/07/07
Document Date:2008/07/01Document Type:Policy Research Working Paper
SubTopics:Access to Finance; Economic Theory & Research; Banks & Banking Reform; Debt Markets; Language:English
Region:The World RegionReport Number:WPS4661
Volume No:1 of 1  

Summary: 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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