Lund Papers in Economic History,
Lund University, Department of Economic History

Abstract: At present, relatively little is known about the relationship between bank credit allocation and economic growth. It seems clear that the structural characteristics of the banking system are significant factors influencing long-run allocation of credit across real sectors of the economy as well as across financial institutions. The purpose of this study is to examine the relationship between changes in credit allocation across sectors and economic growth in a long-term perspective. In addition, this study addresses changes appeared in the loanable funds among the different types of financial institutions for a number of long-run periods. During these periods, there were a number of waves of credit allocation as a result of economic transformation and high priorities were given by the major banks. During the periods under research, in reallocating their available funds, banks all affected almost by financial, monetary, and economic conditions in the country. Banking history in Denmark suggests that this study can contribute to fruitful field of inquiry for understanding bank credit allocation in relation to economic changes. Particular emphasis will be given in this paper to the contribution of savings banks, commercial banks, and mortgage institutions to the various sectors of the economy.

Keywords: banking history in Denmark; banking and economic growth; credit and economic growth; bank credit allocation

JEL-codes: N23; N24

35 pages, November 20, 2013

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