ABSTRACT
Credit is like cholesterol. There is good and bad. Christine Lagarde1
Britain is a sort of United States within easy reach of Europe, but without the attraction of the frontier.2
1 Introduction
The Great Recession3 has stimulated reappraisal of credit regulation and analysis of the relationship of household credit to changes in capitalism over recent decades, when household finance became a large share of bank profits.4 Consumer credit may be a substitute for redistribution,5 a supplement for stagnant wages,6 with housing bubbles funded by easy mortgage credit providing a form of demandside Keynesianism to substitute for government investment.7 Christine Lagarde’s comment above suggests that countries should adopt institutional structures for regulation which encourage the ‘right’ rather than the ‘wrong’ type of credit, recognizing that institutions matter in shaping access to markets and individuals’ exposure to, or protection from, risk. Governments have rarely left credit ‘to the market’ since credit is often an instrument of economic and social policy, and is central to housing policy.
