Credit expansion and the economy

Angeles, L. (2015) Credit expansion and the economy. Applied Economics Letters, 22(13), pp. 1064-1072. (doi: 10.1080/13504851.2014.1000515)

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101094.pdf - Accepted Version



Credit expansion has been associated with faster economic growth and with a higher occurrence of financial crises – a pair of results which seem to contradict each other. This paper advances an explanation for these results by separating credit to the private sector into credit to firms and credit to households. The empirical analysis shows that credit to firms is responsible for the positive growth effect, while the higher occurrence of crises is mainly due to credit to households. The events of the last decade, where fast credit expansion led to crises and very little growth, can be understood as a shift in the composition of credit towards its household component.

Item Type:Articles
Additional Information:This is an Accepted Manuscript of an article published by Taylor & Francis in on Applied Economics Letters, available online:
Glasgow Author(s) Enlighten ID:Angeles, Professor Luis
Authors: Angeles, L.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Applied Economics Letters
ISSN (Online):1466-4291
Published Online:20 January 2015
Copyright Holders:Copyright © 2015 Taylor and Francis
First Published:First published in Applied Economics Letters 22(13):1064-1072
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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