Were Schumpeter and Keynes Right? The Differentiation of Credit and its Impact on Economic Growth in Taiwan
(2025) EKHS21 20251Department of Economic History
- Abstract (Swedish)
- This thesis analyzes whether the growth in productive credit is positively associated with economic growth in Taiwan from 1997 to 2023, while the growth in unproductive credit is not. It also focuses on whether credit creation is the main determinant of investment rather than savings. This study constructs new proxies of productive and unproductive credit by including loans to the government and all portfolio investments made by banks. It relies on quantitative methods, including statistical analysis and econometric methods, to examine the causal effect of credit for productive and unproductive purposes on nominal GDP growth in Taiwan. This study finds that productive credit is positively associated with economic growth and that there is... (More)
- This thesis analyzes whether the growth in productive credit is positively associated with economic growth in Taiwan from 1997 to 2023, while the growth in unproductive credit is not. It also focuses on whether credit creation is the main determinant of investment rather than savings. This study constructs new proxies of productive and unproductive credit by including loans to the government and all portfolio investments made by banks. It relies on quantitative methods, including statistical analysis and econometric methods, to examine the causal effect of credit for productive and unproductive purposes on nominal GDP growth in Taiwan. This study finds that productive credit is positively associated with economic growth and that there is unidirectional causality between the growth in productive credit and nominal GDP growth at the 1 percent significance level. The results also show that unproductive credit has neither a statistically significant nor a causal effect on GDP growth. These findings are consistent with the theories provided by Schumpeter, Keynes, and Werner, which emphasize that credit creation for productive purposes leads to economic growth. In contradiction to neoclassical growth theory, the results show that investment is determined by credit creation—not savings. The findings justify the use of selective credit policies to direct the allocation of credit to productive sectors of the economy. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9206174
- author
- Eken, Thijs Antonius LU
- supervisor
- organization
- course
- EKHS21 20251
- year
- 2025
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Schumpeter, Keynes, credit creation, productive, unproductive, economic growth, Taiwan
- language
- English
- id
- 9206174
- date added to LUP
- 2025-08-18 10:30:50
- date last changed
- 2025-08-18 10:30:50
@misc{9206174,
abstract = {{This thesis analyzes whether the growth in productive credit is positively associated with economic growth in Taiwan from 1997 to 2023, while the growth in unproductive credit is not. It also focuses on whether credit creation is the main determinant of investment rather than savings. This study constructs new proxies of productive and unproductive credit by including loans to the government and all portfolio investments made by banks. It relies on quantitative methods, including statistical analysis and econometric methods, to examine the causal effect of credit for productive and unproductive purposes on nominal GDP growth in Taiwan. This study finds that productive credit is positively associated with economic growth and that there is unidirectional causality between the growth in productive credit and nominal GDP growth at the 1 percent significance level. The results also show that unproductive credit has neither a statistically significant nor a causal effect on GDP growth. These findings are consistent with the theories provided by Schumpeter, Keynes, and Werner, which emphasize that credit creation for productive purposes leads to economic growth. In contradiction to neoclassical growth theory, the results show that investment is determined by credit creation—not savings. The findings justify the use of selective credit policies to direct the allocation of credit to productive sectors of the economy.}},
author = {{Eken, Thijs Antonius}},
language = {{eng}},
note = {{Student Paper}},
title = {{Were Schumpeter and Keynes Right? The Differentiation of Credit and its Impact on Economic Growth in Taiwan}},
year = {{2025}},
}