Credit Composition, Output Composition, and External Balances
This paper builds on recent research examining the impact of finance on economic outcomes. Specifically, it asks whether credit extended to households and firms has an impact on the share of exports in gross domestic product and on the trade balanc...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/278821496340636969/Credit-composition-output-composition-and-external-balances http://hdl.handle.net/10986/26954 |
| Summary: | This paper builds on recent research
examining the impact of finance on economic outcomes.
Specifically, it asks whether credit extended to households
and firms has an impact on the share of exports in gross
domestic product and on the trade balance. The analysis
finds that although household credit is not positively
related to export shares or trade balances, firm credit is
significantly related to both. The relationship with export
shares is particularly strong and robust. Higher shares of
credit going to firms means a higher export share in gross
domestic product and stronger trade balances (any effect of
credit on imports is subsumed by the larger effect on
exports). Household credit has a negative or insignificant
relationship with the trade balance and the share of exports
in gross domestic product. Credit may also affect the choice
between types of goods produced domestically, not just
whether they are produced for export or domestic
consumption. The paper finds that household credit has a
negative relationship with the share of manufacturing in
gross domestic product. Firm credit is positively associated
with the share of manufacturing in gross domestic product,
while the share of services does not seem to be affected by either. |
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