A Schumpeterian analysis of the credit market

Marcello Messori

Structural Change and Economic Dynamics, 2014, vol. 28, issue C, 43-59

Abstract: Schumpeter shows that bank credit acts as money-capital and, therefore, constitutes the necessary premise for the realization of the innovative processes planned by entrepreneurs. This makes it important to specify the debt contracts between each bank and entrepreneurs during the prosperity phase of Schumpeter's cyclical development. The present paper aims to point out the achievements and the limits of Schumpeter's monetary theory with respect to this point, that is the debt contract design. On the side of the limits, I maintain that Schumpeter's approach, although representing one of the most stimulating contributions in the history of economic analysis, asks for refinements as regard to the objective-function of the individual banks, the determination of the interest rates, and the usableness of the credit demand and supply curves. Schumpeter's posthumous treatise on money provides stimulating insights for the definition of these refinements.

Keywords: Banking activity; Monetary theory; Development; History of economic analysis (search for similar items in EconPapers)
JEL-codes: B10 E51 G21 O30 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:28:y:2014:i:c:p:43-59

DOI: 10.1016/j.strueco.2013.11.001

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