Determinants of Financial Development : How Equality of Access Impacts Private Credit

The large literature on the relationship between finance and growth uses the Private Credit/GDP ratio as the proxy for financial development. However, little research has gone into the evaluation of policies to impact Private Credit. Finance theory points to information sharing and creditor rights as the important determinants of credit availability and has largely dismissed access to formal financial markets as a factor due to unreliable data. This paper is the first to utilize the novel FINDEX dataset from the World Bank and evaluate the impact of inclusive access to financial services on the main proxy in the literature - Private Credit. Significant evidence is found that inclusive financial systems have more explanatory power than both creditor rights and information sharing