Working Paper: NBER ID: w11078
Authors: Simeon Djankov; Caralee McLiesh; Andrei Shleifer
Abstract: We investigate cross-country determinants of private credit, using new data on legal creditor rights and private and public credit registries in 129 countries. We find that both creditor protection through the legal system and information sharing institutions are associated with higher ratios of private credit to GDP, but that the former is relatively more important in the richer countries. An analysis of legal reforms also shows that improvements in creditor rights and in information sharing precede faster credit growth. We also find that creditor rights are extremely stable over time, contrary to the convergence hypothesis. Finally, we find that legal origins are an important determinant of both creditor rights and information sharing institutions.
Keywords: Private Credit; Creditor Rights; Information Sharing; Legal Origins
JEL Codes: G3; G32; K22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stronger creditor rights (G33) | Higher private credit to GDP ratios (F65) |
| Presence of credit registries (G21) | Higher private credit to GDP ratios (F65) |
| Improvements in creditor rights (G33) | Faster credit growth (E51) |
| Information sharing precedes faster credit growth (F65) | Faster credit growth (E51) |
| Creditor rights (G33) | Higher private credit to GDP ratios (F65) |
| Information sharing institutions (O36) | Higher private credit to GDP ratios (F65) |
| Legal origins (K15) | Creditor rights (G33) |
| Legal origins (K15) | Information sharing (O36) |