More Mortgages, Lower Growth?

Bezemer, Dirk; Grydaki, Maria; Zhang, Lu

doi:10.1111/ecin.12254

Cited by 74 publications

(66 citation statements)

References 71 publications

(157 reference statements)

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“…The correlation with GDP per capita is significant and strongly negative in both FE and system-GMM regressions. This result sheds some light on recent finance-growth findings (Arcand et al, 2015;Bezemer et al, 2016). If lower business credit shares are one feature of more financial development, then it is understandable that more financial development is not necessarily 'good for growth', given the fact that it is business credit, not household credit, which drives the finance-growth relation (Beck et al, 2012).…”

Section: Estimation Resultsmentioning

confidence: 60%

“…They build a similar cross-country dataset to ours, with smaller country coverage and shorter time span, including a broad distinction between household and business credit. Beck et al (2012) find that household credit has negligible growth effects, a finding confirmed by Bezemer et al (2016).…”

Section: Differentiating Bank Credit: Relevance To Growth Stability mentioning

confidence: 80%

“…Hence the channels from credit to growth are different, so that their growth coefficients can be expected to diverge. The rising share of mortgages in total credit may be a key reason for the falling creditgrowth coefficients observed in the literature (Rousseau and Wachtel, 2011;Arcand et al, 2015;Bezemer et al, 2016), and also for the financial fragility connected to credit expansions (Jorda et al, 2016).…”

Section: Differentiating Bank Credit: Relevance To Growth Stability mentioning

confidence: 99%

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The Shift in Bank Credit Allocation: New Data and New Findings

2017

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In this paper we present a new data set on bank credit in four categories: home mortgages, consumer credit, bank loans to non-bank financials, and loans to nonfinancial business, for 74 economies over 1990-2013. We offer a full description of sources and methods of data collection and construction and comparisons with adjacent data sets. We document key trends including the shift in bank credit allocation away from traditional business lending. The literature suggests substantial consequences of this 'debt shift' for growth, income distribution and macroeconomic resilience, which motivated this data construction. A second contribution is to analyze drivers of debt shift in fixed-effects and system-GMM regressions for the full sample and separately for advanced and emerging economies. We find that debt shift is larger in advanced economies with a stronger presence of foreign banks and higher trade. Financial deregulation strongly correlates with debt shift.

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Section: Estimation Resultsmentioning

confidence: 60%

Section: Differentiating Bank Credit: Relevance To Growth Stability mentioning

confidence: 80%

Section: Differentiating Bank Credit: Relevance To Growth Stability mentioning

confidence: 99%

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The Shift in Bank Credit Allocation: New Data and New Findings

2017

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“…There is an increasing recognition of the critical role rising household debt plays as a cause of financial crises (Bezemer et al 2016;Bezemer & Grydaki 2014;Schularick & Taylor 2012;Mian & Sufi 2009). However there is still relatively little systematic empirical research on the reasons for the spectacular rise of household debt in the last decades.…”

Section: Introductionmentioning

confidence: 99%

Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries

Stockhammer¹,

Wildauer

2018

RBE

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The past decades have witnessed a strong increase in household debt and high growth of private consumption expenditures in many countries. This paper empirically investigates four explanations: First, the expenditure cascades hypothesis argues that an increase in inequality induced lower income groups to copy the spending behaviour of richer peer groups and thereby drove them into debt ('keeping up with the Joneses'). Second, the housing boom hypothesis argues that increasing property prices encourage household spending and household borrowing due to wealth effects, eased credit constraints and the prospect of future capital gains. Third, the low interest hypothesis argues that low interest rates encouraged households to take on more debt. Fourth, the financial deregulation hypothesis argues that deregulation of the financial sector boosted credit supply. The paper tests these hypotheses by estimating the determinants of household borrowing using a panel of 11 OECD countries (198011 OECD countries ( -2011. Results indicate that real estate prices and low interest rates were the most important drivers of household debt. In contrast the data does not support the expenditure cascades hypothesis as a general explanation of debt accumulation across OECD countries. Our results are consistent with the financial deregulation hypothesis, but its explanatory power for the 1995-2007 period is low.

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“…The costs to income growth were large. Torsten Beck et al (2012), Bezemer, Grydaki, and Zhang (2016), and Jordà, Taylor, and Schularick (2014) all show with advanced statistical analysis that the contribution of household credit to income growth has become Finance Is Not the Economy 755 negligible or is plainly negative. Last year, IMF and OECD reports made the same point (Sahay et al 2015;Cornede, Denk and Hoeller 2015).…”

Section: Empirical Evidencementioning

confidence: 99%