The effect of enterprise and household credit on economic growth: New evidence from European union countries

Theories predict a positive effect of enterprise credit market development on economic growth and an ambiguous relationship between household credit market and growth. The purpose of this paper is to assess empirically the effects of enterprise credit market and household credit market on economic growth. The empirical study is based on estimations of OLS and IV regression and GMM dynamic panel data model. Using a sample of 27 European's countries over the period 1995-2012, empirical results shows that enterprise credit market affects positively economic growth whereas household credit market has a negative effect. Our finding gives an explanation of the negative effect of aggregate credit measures on economic growth in empirical literature as well as the heterogeneity of the credit-growth across country. (C) 2013 Elsevier Inc. All rights reserved.