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Credit policy and the ‘debt shift’ in advanced economies

Bezemer, D; Ryan-Collins, J; van Lerven, F; Zhang, L; (2021) Credit policy and the ‘debt shift’ in advanced economies. Socio-Economic Review 10.1093/ser/mwab041. (In press). Green open access

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Abstract

The decline in the share of bank credit to non-financial firms since the 1990s, relative to credit for real estate and financial asset markets, has raised concerns over economic growth and financial stability and sparked renewed interest in credit policies, instruments and institutions. We examine their theoretical case and post-war use, and trace their demise during the wider market-oriented policy reconfiguration from the 1980s. Notably, this included home ownership polices favouring mortgage markets. We then examine the empirical relationship between credit policy and credit allocation in the 1973–2005 period for 17 advanced economies. Taking account of co-integration, we present evidence that the decline of credit policies is significantly associated with a lower share of lending to non-financial firms. It may be worth revisiting the potential of credit policies to support adequate financing for goals such as innovation, industrial development and the transition to a low-carbon economy.

Type: Article
Title: Credit policy and the ‘debt shift’ in advanced economies
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/ser/mwab041
Publisher version: https://doi.org/10.1093/ser/mwab041
Language: English
Additional information: © The Author(s) 2021. Published by Oxford University Press and the Society for the Advancement of Socio-Economics. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/10138570
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