Institutions and credit

Farla, Kristine (2012). Institutions and credit. UNU-MERIT.

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UNU-MERIT Working Papers

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  • Author Farla, Kristine
    Title Institutions and credit
    Publication Date 2012
    Publisher UNU-MERIT
    Abstract It is well-known that the extent of credit lent to private agents differs widely between countries. The `financial deepening' of the economy offers opportunities as well as financial risks. This study investigates the extent to which institutional characteristics are re- lated to countries' level of credit depth. The findings suggest that the formalization of property rights, contracting, and competition institutions is positively related to an increase in the level of credit to the private sector. This result remains robust when controlling for the effect of financial policy. The effect of institutional characteristics on banks' lending capacity and investment is mixed. However, overall, institutional formalization has a positive impact on credit deepening and investment.
    Keyword Institutions
    Financial development
    Property rights
    Contract
    Competition
    JEL E44
    G18
    O11
    O43
    Copyright Holder UNU-MERIT
    Copyright Year 2012
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    Created: Wed, 11 Dec 2013, 17:24:04 JST