Correlated lending to government and the private sector: what do we learn from the Great Recession?

Peterson Ozili

Arab Gulf Journal of Scientific Research, 2023, vol. 42, issue 1, 114-133

Abstract: Purpose - The purpose of the study is to investigate the correlation between credit supply to government and credit supply to the private sector to determine whether there is a crowding-out or crowding-in effect of credit supply to government on credit supply to the private sector. Design/methodology/approach - The study used data from 43 countries during the 1980–2019 period. The study employed the Pearson correlation methodology to analyze the data. Findings - There is a significant positive correlation between credit supply to government and credit supply to the private sector. There is also a significant positive relationship between credit supply to government and credit supply to the private sector, implying a crowding-in effect of government borrowing on private sector borrowing. The positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the period before the Great Recession, while the positive correlation is weaker and less significant during the Great Recession, and the correlation further weakens after the Great Recession. The regional analyses show that the positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the African region than in the Asian region and the region of the Americas. Originality/value - There is no evidence on the correlation between credit supply to government and credit supply to the private sector during the Great Recession.

Keywords: Domestic credit to the private sector; Government borrowing; Crowding-out; Credit supply; Private sector; Government; Bank credit; Recession; Africa; Asia; Europe; America; Correlation; E51; G21 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

Related works:
Working Paper: Correlated lending to government and the private sector: what do we learn from the Great Recession? (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:agjsrp:agjsr-09-2022-0176

DOI: 10.1108/AGJSR-09-2022-0176

Access Statistics for this article

Arab Gulf Journal of Scientific Research is currently edited by Prof. Soud Mohammed Almahamid

More articles in Arab Gulf Journal of Scientific Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().