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Global Liquidity and Household Credit Growth

Berrak Bahadir (bbahadir@fiu.edu) and Neven Valev (nvalev@gsu.edu)
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Berrak Bahadir: Florida International University
Neven Valev: Georgia State University

Open Economies Review, 2023, vol. 34, issue 5, No 5, 1039-1061

Abstract: 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.

Keywords: Consumer credit; Household credit; Global liquidity (search for similar items in EconPapers)
JEL-codes: E3 G21 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11079-022-09708-z

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