Tax policies helped fuel the credit boom by encouraging borrowing by companies and individuals, the International Monetary Fund said on Tuesday as it suggested countries change their tax rules to reduce such incentives.

The IMF said tax regimes in most countries encouraged companies to finance themselves with debt rather than equity and also made it cheaper for people to take out mortgages. Such policies contributed to an unsustainable build-up of credit, the collapse of which propelled the world into recession.