Catching up or drifting apart: Convergence of household and business credit in Europe

Bahadir, Berrak; Valev, Neven T.

doi:10.1016/j.iref.2016.10.006

Cited by 24 publications

(27 citation statements)

References 33 publications

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“…These results stand somewhat in opposition to Bahadir and Valev (2017), who did not find a statistically significant relation between Eurozone membership and consumer credit growth rate. It is equal to 1 for periods when a given country was a member of the monetary union and 0 otherwise.…”

Section: Alternative Model Specificationscontrasting

confidence: 83%

“…Both models suggest that entering monetary union is positive for credit it -it leads ceteris paribus to higher consumer credit in relation to GDP by 0.8-0.9 percentage points (depending on which model we are analysing). These results stand somewhat in opposition to Bahadir and Valev (2017), who did not find a statistically significant relation between Eurozone membership and consumer credit growth rate.…”

Section: Alternative Model Specificationscontrasting

confidence: 83%

“…Chrystal and Mizen (2005) confirm such findings. Bahadir and Valev (2017) modelled the growth rate of consumer credit. Paradiso et al (2014)-using specifications consistent with the life cycle hypothesis-highlight that consumer credit is linked to real wealth, real disposable income, and real interest rates via cointegrating relations.…”

Section: Of Consumer Creditmentioning

confidence: 99%

“…Caporale, Rault, Sova, and Sova (2015) suggest that growth of consumer credit reflects the anticipation of higher future income and consumption smoothing. Bahadir and Valev (2017) modelled the growth rate of consumer credit. The main explanatory variable was the lagged share of consumer credit in GDP.…”

Section: Of Consumer Creditmentioning

confidence: 99%

See 3 more Smart Citations

Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration

Borowski

Jaworski

Olipra

2018

International Finance

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We investigated the determinants of consumer credit in relation to nominal GDP in 23 EU countries using panel regressions for 1997–2014. Our contribution to existing research is evidence that both higher density of bank units and greater concentration of the banking sector lead to higher consumer lending. Our results show that the consumer credit to GDP ratio decreases when banking supervision becomes a part of a politically independent central bank. This signals that access to consumer credit is more difficult when supervision is independent from government. Finally, we find that joining the Eurozone boosts consumer lending. This result is consistent with the permanent income hypothesis, which states that households’ current consumption is determined not only by their current income but also by the income that they expect to earn. Our results can be used to increase the effectiveness of macroprudential policy in avoiding consumer lending booms and ensuring financial stability.

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Section: Alternative Model Specificationscontrasting

confidence: 83%

Section: Alternative Model Specificationscontrasting

confidence: 83%

Section: Of Consumer Creditmentioning

confidence: 99%

Section: Of Consumer Creditmentioning

confidence: 99%

See 2 more Smart Citations

Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration

Borowski

Jaworski

Olipra

2018

International Finance

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“…The results show that the low-income countries that experienced an initial low level of financial depth prior to 2008 experienced a generally faster convergence process. Bahadir and Valev (2017) studied household and business credit convergence in Europe over the period 1995-2013 in 30 European countries. Their results led to a conclusion that the process of financial convergence may slow down over time, and that it is stronger in the case of transition economies.…”

Section: -2008 Tunisiamentioning

confidence: 99%

Financial Development and Economic Growth in Poland 1990-2018

Škare

Sinković

Porada-Rochoń

2019

Technological and Economic Development of Economy

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The aim of the paper is to study finance-economic growth nexus in Poland using a time series approach. We find evidence of the existence of the finance-economic growth link in Poland. Most empirical studies do not consider the lending structure of the financial sector (share of households’ vs firms in total credits). The obtained results show that when using the share of households and companies in total credits, the long run empirical relationship in VECM is statistically significant and larger. Empirical studies using total private credit share in the GDP or the value/volume of total credits tend to undervalue the impact of financial development on economic growth. In the case of Poland, empirical evidence that supports this hypothesis was found, and therefore policymakers and researchers should take bank lending structure into account. Furthermore, the study shows that financial series may possibly have long memory properties and that researching the financial development-growth nexus could require using fractional integration methods. The reported evidence suggests financial development plays a significant role in both economic growth and credit growth. Due to data limitation, this study focuses on a single country case – Poland with the need for further research (larger sample).

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Credit information sharing and the shift in bank lending towards households

Bahadir

Valev

2019

Int. J Fin Econ

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The disproportionate increase of bank lending to households relative to businesses is a central trend in the financial sector of many countries. In this paper, we provide evidence that credit information sharing has strongly contributed to this trend. Specifically, using a sample of 25 European countries, we show that credit information sharing is associated with a significant tilt in private bank lending towards household debt. That result is robust to various estimation techniques and control variable sets, as well as to instrumental variable estimations.

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Catching up or drifting apart: Convergence of household and business credit in Europe

Cited by 24 publications

References 33 publications

Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration

Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration

Financial Development and Economic Growth in Poland 1990-2018

Credit information sharing and the shift in bank lending towards households

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