Credit, inequality and economic activity: mortgages in Minas Gerais (Brazil, 1893-1904)

Abstract

The literature suggests that credit may be a determining factor in the economic development. We studied the relationship between mortgages and economy for a set of counties in Minas Gerais (Brazil). We used unpublished data records of loans, coffee production and tax revenue to verify the effects of credit on the economy. We tested, through statistical regressions how mortgages values and their concentration in 1893-1904 explained average tax revenues in 1904-1905 and coffee production in 1905-1912. The results demonstrate that mortgages contributed positively to economic in this region during that period.