TEL  Vol.4 No.9 , December 2014
Credit Markets Development and Economic Growth: Theory and Evidence
Author(s) Seifallah Sassi
ABSTRACT
The purpose of this paper is to study jointly the effects of consumer credit market and investment credit market on economic growth. We introduce consumer credit market in Schumpeterian framework. Under credit market imperfections, our model predicts a negative effect of the development of consumer credit market and a positive effect of the development of investment credit market on economic growth. We next confront the model on a panel of 27 European’s countries over the period 1995-2012. Using GMM dynamic panel data estimation, empirical results confirm our theoretical predictions. Credit composition may give explanation of the ambiguous credit-growth nexus and its heterogeneity across country.

Cite this paper
Sassi, S. (2014) Credit Markets Development and Economic Growth: Theory and Evidence. Theoretical Economics Letters, 4, 767-776. doi: 10.4236/tel.2014.49097.
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