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

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Author Info
Beck, T.H.L.
Büyükkarabacak, B.
Rioja, F.
Valev, N. (Tilburg University, Center for Economic Research)

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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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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2009-41.

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Date of creation: 2009
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Handle: RePEc:dgr:kubcen:200941

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Find related papers by JEL classification:
D14 - Microeconomics - - Household Behavior - - - Personal Finance
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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