Economic Growth and Bank Innovation

Gary Gorton and Ping He

No 29326, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Based on archival and survey data we show that the maturity of U.S. business loans has been continuously increasing since the mid-1930s when banks invented the term loan. Concurrently, bank innovation first involved the invention of credit analysis and covenant design. Later, bank innovation included the advent of loan sales, increased loan syndications, the opening of the leveraged loan market, and the securitization of loans in collateralized loan obligations. We estimate and calibrate a model of bank innovation to determine the quantitative contribution of bank innovation to economic growth.

JEL-codes: O0 O11 O30 O43 (search for similar items in EconPapers)
Date: 2021-10
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-fdg, nep-gro, nep-his, nep-knm and nep-pay
Note: CF DAE EFG ME PR
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