What Determines the Size of Bank Loans in Industrialized Countries? The Role of Government Debt

Riccardo De Bonis and Massimiliano Stacchini

No 39, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: Given the importance of banking intermediation, we investigate the determinants of the size of bank loans in 18 OECD countries in the period 1981-1997. The aim of the paper is to show that the ratio of government debt to GDP has a negative effect on the level of bank credit. Second, countries with a German legal origin have higher ratios of loans to GDP than common law countries. Our results are robust to including such variables in the regressions as per capita GDP, stock market capitalization, the banking reserve requirement, the level of inflation and its volatility, openness to trade and the use of different econometric methods.

Keywords: bank loans; financial repression; government debt; legal origin of finance (search for similar items in EconPapers)
JEL-codes: C23 G18 G21 (search for similar items in EconPapers)
Pages: 27
Date: 2010-04
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (1)

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Working Paper: What determines the size of bank loans in industrialized countries? The role of government debt (2009)
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