Template-type: ReDIF-Paper 1.0
Author-Name: Farla, Kristine
Author-Email: farla@merit.unu.edu
Author-Workplace-Name: UNU-MERIT / MGSOG, Maastricht University
Title: Institutions and credit
Abstract: It is well-known that the extent of credit lent to private agents
	 differs widely between countries. The `financial deepening' of the
	 economy offers opportunities as well as financial risks. This study
	 investigates the extent to which institutional characteristics are re-
	 lated to countries' level of credit depth. The findings suggest that the
	 formalization of property rights, contracting, and competition
	 institutions is positively related to an increase in the level of credit
	 to the private sector. This result remains robust when controlling for
	 the effect of financial policy. The effect of institutional
	 characteristics on banks' lending capacity and investment is mixed.
	 However, overall, institutional formalization has a positive impact on
	 credit deepening and investment. 
Classification-JEL: E44, G18, O11, O43
Keywords: Institutions, Financial Development, Property Rights, Contract, Competition
Series: UNU-MERIT Working Papers
Creation-Date: 2012
Number: 2012-038
File-URL: https://unu-merit.nl/publications/wppdf/2012/wp2012-038.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2012038