Why Credit Matters for Productivity

Carmen Pagés
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Carmen Pagés: Inter-American Development Bank

Chapter 6 in The Age of Productivity, 2010, pp 123-151 from Palgrave Macmillan

Abstract: Abstract An economy without credit is like a car without fuel: it simply cannot move forward. There is abundant evidence that credit is an important driver of economic growth.1 At the most basic level, credit is the mechanism through which savers in the economy connect to borrowers, enabling them to carry out investment projects that are the basis for the process of capital accumulation. But credit does not only foster economic growth through investment. Credit also promotes productivity growth in a number of ways. Indeed, the “productivity channel” through which credit impacts economic growth is an amply studied mechanism.2

Keywords: Gross Domestic Product; Small Firm; Total Factor Productivity; Real Exchange Rate; Financial Development (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1057/9780230107618_6

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