While public debt surged, bank lending declined during the World Wars and the Depression-era of the 1930s. Around 1950, private credit amounted to less than a third of annual GDP on average. By the early 1970s, it had doubled and reached its pre-World War I level.
Since then, the private debt ratio has nearly doubled again, arriving at more than 110% of annual GDP in 2016 (Jordà, Schularick and Taylor 2016b; Schularick and Taylor 2012). The spectacular rise in total debt relative to GDP since the 1970s depicted in Figure 1 (Panel a) has thus mainly been the result of an unprecedented growth of private sector debt.