TITLE:
Credit Markets Development and Economic Growth: Theory and Evidence
AUTHORS:
Seifallah Sassi
KEYWORDS:
Credit Markets Development, Economic Growth, Consumer Credit, Investment Credit, Panel Data
JOURNAL NAME:
Theoretical Economics Letters,
Vol.4 No.9,
November
21,
2014
ABSTRACT: The purpose of this paper is to study
jointly the effects of consumer credit market and investment credit market on
economic growth. We introduce consumer credit market in Schumpeterian framework. Under credit market imperfections, our model predicts a negative effect
of the development of consumer credit market and a positive effect of the
development of investment credit market on economic growth. We next confront
the model on a panel of 27 European’s countries over the period 1995-2012.
Using GMM dynamic panel data estimation, empirical results confirm our theoretical predictions. Credit composition may give explanation of the ambiguous
credit-growth nexus and its heterogeneity across country.