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Global Liquidity and Household Credit Growth

Author

Listed:
  • Berrak Bahadir

    (Florida International University)

  • Neven Valev

    (Georgia State University)

Abstract

We show that global liquidity contributes to household credit growth across countries. We are interested in that link as household credit growth - more so than growth in other types of credit - has contributed to financial crises. The effect of global liquidity on household credit growth is particularly strong in countries that are more closely integrated with the world economy as well as in those with a greater level of financial development and more open capital markets. These are the types of countries that were most strongly affected during the global financial crisis. We also find tentative evidence that countries with a greater presence of foreign banks and those with more concentrated banking systems experience a closer link between global liquidity and household credit.

Suggested Citation

  • Berrak Bahadir & Neven Valev, 2023. "Global Liquidity and Household Credit Growth," Open Economies Review, Springer, vol. 34(5), pages 1039-1061, November.
    • Handle: RePEc:kap:openec:v:34:y:2023:i:5:d:10.1007_s11079-022-09708-z
    DOI: 10.1007/s11079-022-09708-z
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    More about this item

    Keywords

    Consumer credit; Household credit; Global liquidity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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