DETERMINANTS OF HOUSEHOLD DEBT-TO-GDP FINANCIAL STABILITY, AND ECONOMIC RESILIENCE. A CROSS-COUNTRY PANEL ANALYSIS (2000–2023)

Chidera Favour Ebele and Gideon Ihuarulam
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Chidera Favour Ebele: Faculty of Social and Behavioural Sciences, Georgia State University, Atlanta, United States of America
Gideon Ihuarulam: Faculty of Arts and Social Sciences, Nile University, Abuja, Nigeria

Studii Financiare (Financial Studies), 2025, vol. 29, issue 2, 48-82

Abstract: This study investigates the determinants of household debt-to-GDP across ten economies, comprising both developed and developing countries, spanning the period from 2000 to 2023. Employing a panel econometric framework, including Fixed Effects, Random Effects, and Panel ARDL models, the analysis captures both short- and long-run dynamics of household indebtedness. The results reveal that GDP per capita has a negative correlation with household debt-to-GDP, consistent with the life-cycle hypothesis, while financial inclusion emerges as a significant long-term driver of credit expansion. Lending rates show a counterintuitive positive relationship with debt, suggesting financialization effects, and non-performing loan (NPL) ratios are positively associated with household debt levels, signalling financial sector fragility. The findings suggest that monetary policy alone may be insufficient to manage household debt sustainably, highlighting the need for macroprudential measures such as loan-to-income (LTI) and debt-to-income (DTI) caps. The study recommends aligning financial inclusion initiatives with robust consumer protection frameworks to mitigate the risks of over-indebtedness. These insights contribute to the evolving discourse on financial stability, debt sustainability, and economic resilience.

Keywords: credit market dynamics; financial access; dynamic panel analysis; household borrowing patterns; credit risk exposure (search for similar items in EconPapers)
JEL-codes: C33 D14 E44 E52 G21 H63 (search for similar items in EconPapers)
Date: 2025
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