The sword of damocles: Debt and depression

Jun Zhou, Aslihan Gizem Korkmaz, Youwei Li, Pengpeng Yue and Yuhan Yan

International Review of Financial Analysis, 2025, vol. 98, issue C

Abstract: This paper investigates the heterogeneous effects of formal and informal debt on mental health. We use unique data on Chinese households between 2014 and 2018 to examine the relationship between household debt obtained from different sources and the possibility of suffering from depression. Our main findings indicate that indebtedness is linked to depression and impairs borrowers’ mental health and other health conditions. Furthermore, we suggest that this negative impact is mainly due to borrowing from informal creditors, whereas debt obtained from formal sources has a negligible impact on depression.

Keywords: Household debt; Informal credit; Mental health; Depression (search for similar items in EconPapers)
JEL-codes: D12 D14 G51 I19 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:98:y:2025:i:c:s1057521924008093

DOI: 10.1016/j.irfa.2024.103877

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