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<p>This paper investigates the convergence of private credit and examines how uncertainty influences this convergence process. Based on a neoclassical growth model, we show that economic uncertainty affects the speed of convergence of private credit to its steady state. Utilizing data spanning from 1950–2019 and including 159 economies, we present empirical evidence that aggregate private credit and its components, i.e., household and (non-financial) firm credit, relative to GDP or working-age population, converge across economies over time. However, the process of private credit convergence is slowed down significantly by economic uncertainty measured by the uncertainty index proposed by Ahir et al. (2022).</p>

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Does uncertainty matter for private credit convergence?

  • 期刊论文

  • 发表日期：

    2025年1月10日

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  • Can Xu,
  • Andreas Steiner,
  • Jakob de Haan

摘要

This paper investigates the convergence of private credit and examines how uncertainty influences this convergence process. Based on a neoclassical growth model, we show that economic uncertainty affects the speed of convergence of private credit to its steady state. Utilizing data spanning from 1950–2019 and including 159 economies, we present empirical evidence that aggregate private credit and its components, i.e., household and (non-financial) firm credit, relative to GDP or working-age population, converge across economies over time. However, the process of private credit convergence is slowed down significantly by economic uncertainty measured by the uncertainty index proposed by Ahir et al. (2022).