Credit composition, output composition, and external balances

Roumeen Islam

No 8082, Policy Research Working Paper Series from The World Bank

Abstract: This paper builds on recent research examining the impact of finance on economic outcomes. Specifically, it asks whether credit extended to households and firms has an impact on the share of exports in gross domestic product and on the trade balance. The analysis finds that although household credit is not positively related to export shares or trade balances, firm credit is significantly related to both. The relationship with export shares is particularly strong and robust. Higher shares of credit going to firms means a higher export share in gross domestic product and stronger trade balances (any effect of credit on imports is subsumed by the larger effect on exports). Household credit has a negative or insignificant relationship with the trade balance and the share of exports in gross domestic product. Credit may also affect the choice between types of goods produced domestically, not just whether they are produced for export or domestic consumption. The paper finds that household credit has a negative relationship with the share of manufacturing in gross domestic product. Firm credit is positively associated with the share of manufacturing in gross domestic product, while the share of services does not seem to be affected by either.

Keywords: Economic Growth; Debt Markets; Economic Theory&Research; International Trade and Trade Rules; Industrial Economics; External Debt (search for similar items in EconPapers)
Date: 2017-06-01
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://documents.worldbank.org/curated/en/278821496340636969/pdf/WPS8082.pdf (application/pdf)

Related works:
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:wbk:wbrwps:8082

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().