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Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration

Author

Listed:
  • Jakub Borowski
  • Krystian Jaworski
  • Jakub Olipra

Abstract

We investigated the determinants of consumer credit in relation to nominal GDP in 23 EU countries using panel regressions for 1997–2014. Our contribution to existing research is evidence that both higher density of bank units and greater concentration of the banking sector lead to higher consumer lending. Our results show that the consumer credit to GDP ratio decreases when banking supervision becomes a part of a politically independent central bank. This signals that access to consumer credit is more difficult when supervision is independent from government. Finally, we find that joining the Eurozone boosts consumer lending. This result is consistent with the permanent income hypothesis, which states that households’ current consumption is determined not only by their current income but also by the income that they expect to earn. Our results can be used to increase the effectiveness of macroprudential policy in avoiding consumer lending booms and ensuring financial stability.

Suggested Citation

  • Jakub Borowski & Krystian Jaworski & Jakub Olipra, 2019. "Economic, institutional, and socio‐cultural determinants of consumer credit in the context of monetary integration," International Finance, Wiley Blackwell, vol. 22(1), pages 86-102, May.
    • Handle: RePEc:bla:intfin:v:22:y:2019:i:1:p:86-102
    DOI: 10.1111/infi.12144
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    Cited by:

    1. Benyan Tan & Yingzhu Guo & Yan Wu, 2024. "The influence and mechanism of female-headed households on household debt risk: empirical evidence from China," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    2. Massimiliano Affinito & Raffaele Santioni & Luca Tomassetti, 2025. "Inside Household Debt: Disentangling Mortgages and Consumer Credit, and Household and Bank Factors. Evidence from Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 11(2), pages 773-814, July.
    3. Domonkos, Tomas & Fisera, Boris & Siranova, Maria, 2023. "Income inequality as long-term conditioning factor of monetary transmission to bank rates," Economic Modelling, Elsevier, vol. 128(C).

    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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