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Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries

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  • Beck Thorsten

    ()
    (Tilburg University)

  • Büyükkarabacak Berrak

    ()
    (University of Georgia)

  • Rioja Felix K.

    ()
    (Georgia State University)

  • Valev Neven T.

    ()
    (Georgia State University)

Abstract

While theory predicts different effects of household credit and enterprise credit on the economy, the empirical literature has mainly used aggregate measures of overall bank lending to the private sector. We construct a new dataset from 45 developed and developing countries, decomposing bank lending into lending to enterprises and lending to households and assess the different effects of these two components on real sector outcomes. We find that: 1) enterprise credit is positively associated with economic growth whereas household credit is not; and 2) enterprise credit is significantly associated with faster reductions in income inequality whereas household credit is not. We also find that the share of household credit is higher in more urban societies, in countries with smaller manufacturing sectors and more market-based financial systems, while market structure and regulatory policies are not related to credit composition.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 12 (2012)
Issue (Month): 1 (March)
Pages: 1-46

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Handle: RePEc:bpj:bejmac:v:12:y:2012:i:1:n:2

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Citations

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Cited by:
  1. Brown, Martin & Hoffmann, Matthias, 2013. "Mortgage Relationships," Working Papers on Finance 1310, University of St. Gallen, School of Finance.
  2. Gunther Capelle-Blancard & Claire Labonne, 2011. "More Bankers, More Growth? Evidence from OECD Countries," Working Papers 2011-22, CEPII research center.
  3. Giannetti, Caterina & Jentzsch, Nicola, 2013. "Credit reporting, financial intermediation and identification systems: International evidence," Journal of International Money and Finance, Elsevier, vol. 33(C), pages 60-80.
  4. Thorsten Beck & Andrea Colciago & Damjan Pfajfar, 2014. "The role of financial intermediaries in monetary policy transmission," DNB Working Papers 420, Netherlands Central Bank, Research Department.
  5. Tullio Jappelli & Marco Pagano & Marco di Maggio, 2008. "Households’ Indebtedness and Financial Fragility," CSEF Working Papers 208, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 09 Sep 2010.
  6. Sambit Bhattacharyya & Roland Hodler, 2010. "Do Natural Resource Revenues Hinder Financial Development?� The Role of Political Institutions," Economics Series Working Papers CSAE WPS/2010-40, University of Oxford, Department of Economics.
  7. Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
  8. Thorsten Beck, 2012. "Concluding Observations," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  9. Grydaki, Maria & Bezemer, Dirk, 2013. "Did Credit Decouple from Output in the Great Moderation?," MPRA Paper 47424, University Library of Munich, Germany.
  10. Beck, T.H.L. & Degryse, H.A. & Kneer, E.C., 2012. "Is More Finance Better? Disentangling Intermediation and Size Effects of Financial Systems," Discussion Paper 2012-060, Tilburg University, Center for Economic Research.
  11. Stefano Pagliari & Clive Briault & Alistair Milne & Patricia Jackson & Vicky Pryce & David T. Llewellyn & David Lascelles & Thorsten Beck, 2012. "Future Risks and Fragilities for Financial Stability," SUERF Studies, SUERF - The European Money and Finance Forum, number 2012/3 edited by David T. Llewellyn & Richard Reid.
  12. Gründler, Klaus & Weitzel, Jan, 2013. "The financial sector and economic growth in a panel of countries," Wirtschaftswissenschaftliche Beiträge 123, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.

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