Credit Markets Around the World, 1910-2014

How have credit markets evolved in the long-run around the world? I present evidence based on a novel sectorally disaggregated dataset on credit to the private sector for 120 countries for 1940-2014, as well as new series on total credit going back to 1910. Over the last 50 years, household credit has risen dramatically not only in advanced but also emerging economies. Mortgage lending only accounts for part of the story: particularly in developing countries, consumer credit accounts for much of this growth. I show that corporate lending has essentially stalled relative to GDP since around 1980, which is not explained by the development of global bond markets, cross-border lending, or trade credit. While the main drivers are country-specific, the rise of household credit correlates with financial deregulation, information sharing institutions, demographic shifts, inequality, and legal frameworks.