Determinants of Private Credit in OECD Developed, BRIC's and LAC Countries

The paper studies the determinants of private credit in three groups of countries between 2004 and 2010. It provides subsidies for public policy formulation, based on the argument of heterogeneity between regions. The panel regression models indicate that for the OECD group (Organisation for Economic Cooperation and Development), private consumption was the most relevant determinant, positively correlated with private credit, and its rise of 1 percentage point resulted in a 4.8 percentage points increase in the Credit/GDP ratio. For BRICs group (Brazil, Russia, India and China) and LAC group (Latin America and Caribbean), the Balance of Current Account was the most relevant element and with greater impact on the Credit/GDP ratio. Every negative change of 1 percentage point resulted in a positive change of 2.07 and 0.61 percentage points in the ratio Credit/GDP for each group, respectively, indicating the dependence on foreign savings. These results and others are analyzed in the study.