Credit to private sector, household debt and economic growth: An empirical investigation of EU countries

Dimitrios Asteriou and Konstantinos Spanos

Economics and Business Letters, 2022, vol. 11, issue 4, 34-142

Abstract: This paper investigates how the credit to private sector affects the impact of household debt on economic growth in 25 European Union countries over the period 1995-2018. The findings reveal that the positive effect of household debt on economic growth turns to negative with the onset of the 2008 global financial crisis (GFC) and beyond a certain point at around 58% of GDP, thus suggesting that their relationship is non-linear. Interestingly, the adverse effect subjects to the increased pressure of the credit to private sector when it is above 70%, and the pressure becomes even higher when the ratio is above 90%.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ove:journl:aid:17830

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