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

Abstract

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.

Strong Firms, Weak Banks: The Financial Consequences of Germany’s Export-Led Growth Model

“…The experience of banks elsewhere would point towards household lending as the new name of the game. Newly compiled long-term, cross-country data on bank balance sheets shows a decisive shift over the last four decades from business lending to lending to households as households have increased their indebtedness, primarily in the form of mortgage loans (Jordà, Schularick, and Taylor 2016;Bezemer, Samarina, and Zhang 2017). Figure 8, which illustrates the evolution of domestic bank lending in two snapshots -1995 and 2016clearly shows this 'debt shift' (Bezemer, Samarina, and Zhang 2017).…”

“…Newly compiled long-term, cross-country data on bank balance sheets shows a decisive shift over the last four decades from business lending to lending to households as households have increased their indebtedness, primarily in the form of mortgage loans (Jordà, Schularick, and Taylor 2016;Bezemer, Samarina, and Zhang 2017). Figure 8, which illustrates the evolution of domestic bank lending in two snapshots -1995 and 2016clearly shows this 'debt shift' (Bezemer, Samarina, and Zhang 2017). Even with the pre-crisis boom years excluded, lending to the household sector has substantially increased in France, Italy, Spain, and the UK, and today with the exception of Italyaccounts for the majority of bank lending.…”

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

“…Ryoo (2016) presents a formal Minsky model where household debt is driven by property prices. Bezemer et al (2017) document in a new panel covering 74 countries that mortgages where the primary driver of household credit over their 1990-2011 sample period.…”

Strong Firms, Weak Banks: The Financial Consequences of Germany's Export-Led Growth Model

“…The experience of banks elsewhere would point towards household lending as the new name of the game. Newly compiled long-term, cross-country data on bank balance sheets show a decisive shift over the last four decades from business lending to lending to households as households have increased their indebtedness, primarily in the form of mortgage loans (Bezemer, Samarina, and Zhang 2017;Jordà, Schularick, and Taylor 2016). Figure 8, which illustrates the evolution of domestic bank lending in two snapshots -1995 and 2016 -clearly shows this "debt shift" (Bezemer, Samarina, and Zhang 2017).…”