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

European Banking Center Discussion Paper No. 2009-12

CentER Discussion Paper Series No. 2009-41

41 Pages Posted: 17 Jun 2009

See all articles by Thorsten Beck

Thorsten Beck

City University London - The Business School; Tilburg University - European Banking Center, CentER

Berrak Buyukkarabacak

Ozyegin University

Felix K. Rioja

Georgia State University - Department of Economics

Neven T. Valev

Georgia State University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 24, 2009

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.

Keywords: Financial Intermediation, Household Credit, Firm Credit

JEL Classification: D14, G21, G28

Suggested Citation

Beck, Thorsten and Bahadir, Berrak and Rioja, Felix Korman and Valev, Neven T., Who Gets the Credit? And Does It Matter? Household vs. Firm Lending across Countries (May 24, 2009). European Banking Center Discussion Paper No. 2009-12, CentER Discussion Paper Series No. 2009-41, Available at SSRN: https://ssrn.com/abstract=1411029 or http://dx.doi.org/10.2139/ssrn.1411029

Thorsten Beck (Contact Author)

City University London - The Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Tilburg University - European Banking Center, CentER ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Berrak Bahadir

Ozyegin University ( email )

Kusbakisi Cd. No: 2
Altunizade Uskudar
Istanbul, 34662
Turkey

Felix Korman Rioja

Georgia State University - Department of Economics ( email )

University Plaza
35 Broad Street
Atlanta, GA 30303
United States
404-651-0417 (Phone)
404-651-4985 (Fax)

Neven T. Valev

Georgia State University - Department of Economics ( email )

Andrew Young School of Policy Studies
University Plaza
Atlanta, GA 30303
United States
404-651-0418 (Phone)
404-651-4985 (Fax)

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