Type
Working paper
Titre
Credit, banking fragility and economic performance
Dans
OFCE working paper
Auteur(s)
CREEL Jérôme - Observatoire français des conjonctures économiques (Auteur)
HUBERT Paul - Observatoire français des conjonctures économiques (Auteur)
LABONDANCE Fabien - Observatoire français des conjonctures économiques (Auteur)
Éditeur
Paris : OFCE
Collection
OFCE working paper : 03/2020
Mots clés
Private credit, Capital to assets ratio, Non-performing loans
Résumé
EN
Drawing on European Union data, this paper investigates the hypothesis that private credit and banking sector fragility may affect economic growth. We capture banking sector fragility both with the ratio of bank capital to assets and non-performing loans. We assess the effect of these three variables on the growth rate of GDP per capita, using the Solow growth model as a guiding framework. We observe that credit has no effect on economic performance in the EU when banking fragilities are high. However, the potential fragility of the banking sector measured by the non-performing loans decreases GDP per capita.

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