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Prospects for Household Borrowing in Greece and their Importance for Growth

Author

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  • Ersi Athanassiou

    (Centre for Planning and Economic Research)

Abstract

The paper analyses the evolution of household borrowing in Greece, in an attempt to examine its importance for growth. The analysis suggests that the need to maintain household debt at sustainable levels is likely to induce a drop in the rate of growth of household debt to substantially lower levels. As implied by a simple model developed in the paper, a possible drop will cause a considerable weakening of the injection that household debt contributes to the internal demand for consumption and housing. Taking into account the restrictions Greece is faced with in the area of public spending, the possibility of such a weakening is argued to justify concerns with regard to the future prospects of domestic demand growth.

Suggested Citation

  • Ersi Athanassiou, 2007. "Prospects for Household Borrowing in Greece and their Importance for Growth," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 5(1), pages 89-101.
    • Handle: RePEc:seb:journl:v:5:y:2007:i:1:p:89-101
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    File URL: http://www.asecu.gr/Seeje/issue08/athanassiou.pdf
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    References listed on IDEAS

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    1. Sebastian Barnes & Garry Young, 2003. "The rise in US household debt: assessing its causes and sustainability," Bank of England working papers 206, Bank of England.
    2. Merxe Tudela & Garry Young, 2005. "The determinants of household debt and balance sheets in the United Kingdom," Bank of England working papers 266, Bank of England.
    3. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    4. Berg, Lennart, 1994. "Household Savings and Debts: The Experience of the Nordic Countries," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 10(2), pages 42-53, Summer.
    5. Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-855, September.
    6. Rinaldi, Laura & Sanchis-Arellano, Alicia, 2006. "Household debt sustainability: what explains household non-performing loans? An empirical analysis," Working Paper Series 570, European Central Bank.
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    Cited by:

    1. Yannis Panagopoulos, 2010. "Basel II and the money supply process: some empirical evidence from the Greek banking system," Applied Economics Letters, Taylor & Francis Journals, vol. 17(10), pages 973-976.

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    More about this item

    Keywords

    Household Debt; Growth; Greece;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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