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Dynamic Relationship between Credit and Economic Growth

Author

Listed:
  • Nicolás Butrón

    (Banco Central de Reserva del Perú)

  • Jorge Pozo

    (Banco Central de Reserva del Perú)

Abstract

This article empirically examines the relationship between credit and economic activity. The literature suggests that credit indicators can help explain and predict the evolution of economic activity. Using granular data, we test several specifications to capture the impact of credit growth on GDP growth. Our findings show a positive and statistically significant, though moderate, effect of credit on GDP when controlling for heterogeneity across economic sectors and regions. Moreover, this impact becomes more pronounced the greater the dependence of real activity on the credit market.

Suggested Citation

  • Nicolás Butrón & Jorge Pozo, 2025. "Dynamic Relationship between Credit and Economic Growth," Working Papers 2025-011, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:2025-011
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