Loans to Different Groups and Economic Activity at Times of Crisis and Growth

We study the contribution of loans, granted to different borrower groups, to economic activity in the United States over the period 1971q1–2018q4. In general, loans to households emerge as the most important driver of economic activity when compared to other borrower groups. Meanwhile, for loans in terms of scope, consumer credit has a prime role. Deep economic recessions occurred during the period considered, we focus on the recent global financial crisis (GFC) to reveal the role of the credit crunch. The analysis confirms that loans had a large negative effect during the GFC when compared to other concurrent shocks. Furthermore, a comparison with other periods in post-war US history points to the specific role that loans played in this last crisis. The results are delivered through a historical decomposition analysis based on the estimation of a large VAR through Bayesian techniques.