TY  - BOOK
AU  - Cecchetti,Stephen G.
AU  - Kharroubi,Enisse
ED  - National Bureau of Economic Research.
TI  - Why Does Credit Growth Crowd Out Real Economic Growth?
T2  - NBER working paper series
PY  - 2018///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - September 2018; Hardcopy version available to institutional subscribers
N2  - We examine the negative relationship between the rate of growth in credit and the rate of growth in output per worker. Using a panel of 20 countries over 25 years, we establish that there is a robust correlation: the higher the growth rate of credit, the lower the growth rate of output per worker. We then proceed to build a model in which this relationship arises from the fact that investment projects that are more risky have a higher return. As their borrowing grows more quickly over time, entrepreneurs turn to safer, hence lower return projects, thereby reducing aggregate productivity growth. We take this theoretical prediction to industry-level data and find that credit growth disproportionately harms output per worker growth in industries that have either less tangible assets or are more R&D intensive
UR  - https://www.nber.org/papers/w25079
UR  - http://dx.doi.org/10.3386/w25079
ER  -