Does mortgage lending impact business credit? Evidence from a new disaggregated bank credit data set

We present a new data set for 74 economies over 1990–2016 on domestic bank credit distinguishing between four categories: household mortgages, household consumption credit, loans to non-bank financial institutions, and loans to non-financial business. We offer a description of sources and data collection methods and a comparison with similar data sets. We document the key data trends including a shift in bank credit allocation away from business lending. The literature suggests that this ‘debt shift’ has substantial consequences for growth, income distribution and macroeconomic resilience, which motivates the construction of a new data set. We apply the data to analyze the effect of an increase in mortgage lending flows on business credit flows. We identify several theoretical transmission channels which involve collateral and bank balance sheet effects and wealth effects on consumption. The impact of mortgage credit expansion on business credit growth is found to be positive in advanced economies and negative in emerging and developing economies.