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Too Much of a Good Thing? Households' Macroeconomic Conditions and Credit Dynamics

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  • Martin Hodula
  • Simona Malovana
  • Jan Frait

Abstract

We focus on the link between the macroeconomic conditions faced by households, the confidence of households as investors and consumers, and households' demand for credit. On a sample of 21 OECD countries, we provide empirical evidence that links households' macroeconomic conditions to the evolution of credit. Specifically, we find that: (i) the well-known procyclicality of credit is reinforced in periods of favorable macroeconomic conditions; (ii) the relationship in question grows stronger when good macro conditions are met with optimistic consumer confidence; (iii) household credit is sticky on the way down, while it goes hand in hand with the improving economy during an economic upturn.

Suggested Citation

  • Martin Hodula & Simona Malovana & Jan Frait, 2019. "Too Much of a Good Thing? Households' Macroeconomic Conditions and Credit Dynamics," Working Papers 2019/11, Czech National Bank.
    • Handle: RePEc:cnb:wpaper:2019/11
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    Cited by:

    1. Gric, Zuzana & Ehrenbergerova, Dominika & Hodula, Martin, 2022. "The power of sentiment: Irrational beliefs of households and consumer loan dynamics," Journal of Financial Stability, Elsevier, vol. 59(C).

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    More about this item

    Keywords

    Credit; households; macroeconomic conditions; panel data;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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