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

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  • Beck, Thorsten
  • Büyükkarabacak, Berrak
  • Rioja, Felix
  • Valev, Neven

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 raises economic growth whereas household credit has no effect; 2) enterprise credit reduces income inequality whereas household credit has no effect; and 3) household credit is negatively associated with excess consumption sensitivity, while there is no relationship between enterprise credit and excess consumption sensitivity.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7400.

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Date of creation: Aug 2009
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Handle: RePEc:cpr:ceprdp:7400

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Keywords: Financial intermediation; Firm credit; Household credit;

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Citations

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Cited by:
  1. Thorsten Beck, 2012. "Concluding Observations," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
  2. Beck, Thorsten & Degryse, Hans & Kneer, Christiane, 2012. "Is more finance better? Disentangling intermediation and size effects of financial systems," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/353769, Katholieke Universiteit Leuven.
  3. 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, 03.
  4. Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
  5. Gunther Capelle-Blancard & Claire Labonne, 2011. "More Bankers, More Growth? Evidence from OECD Countries," Working Papers 2011-22, CEPII research center.

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