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A Note On Credit Market Development And Human Capital Accumulation

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  • Ho, Wai-Hong

Abstract

This paper explores the interplay between credit market development and human capital accumulation in a two-period overlapping-generations economy with asymmetric information under the assumption that young lenders channel credits to young borrowers and acquire education. We find that, at the self-selection equilibrium, lenders will allocate more time to acquire education if the cost of screening borrowers falls. Furthermore, a longer duration of lenders' schooling time suppresses borrowers' incentive to cheat thereby enabling lenders to screen less frequently. Our preliminary cross-country empirical analysis appears to support these findings.

Suggested Citation

  • Ho, Wai-Hong, 2013. "A Note On Credit Market Development And Human Capital Accumulation," Macroeconomic Dynamics, Cambridge University Press, vol. 17(7), pages 1525-1541, October.
    • Handle: RePEc:cup:macdyn:v:17:y:2013:i:07:p:1525-1541_00
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    Cited by:

    1. Shahbaz, Muhammad & Naeem, Muhammad & Ahad, Muhammad & Tahir, Iqbal, 2018. "Is natural resource abundance a stimulus for financial development in the USA?," Resources Policy, Elsevier, vol. 55(C), pages 223-232.
    2. Mougnol A Ekoula, Hervé William & Kamguia, Brice & Ndoya, Hermann, 2023. "Do women hold the key to financial sector development in Africa?," International Economics, Elsevier, vol. 173(C), pages 233-248.

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