Assessment of Factors Determining the Level of Private Credit in European Union Countries

Garšvienė Lina (), Balčiūnaitė Kristina (), Matuzevičiūtė Kristina () and Ruplienė Dovilė ()
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Garšvienė Lina: associate professor, Institute of Regional Development, Vilnius University Siauliai Academy Address: Vytauto str. 84, Siauliai, Lithuania.
Balčiūnaitė Kristina: Master of Economics, Institute of Regional Development, Vilnius University Siauliai Academy. Address: Vytauto str. 84, Siauliai, Lithuania.
Matuzevičiūtė Kristina: associate professor, Institute of Regional Development, Vilnius University Siauliai Academy. Address: Vytauto str. 84, Siauliai, Lithuania.
Ruplienė Dovilė: associate professor, Institute of Regional Development, Vilnius University, Siauliai Academy. Address: Vytauto str. 84, Siauliai, Lithuania.

Management of Organizations: Systematic Research, 2022, vol. 87, issue 1, 67-82

Abstract: This paper aims to evaluate the factors determining countries’ private credit level as well as to identify the differences of their effect during the periods when the levels of country private credit exceeded 100 percent of GDP or were below. The research methodology relies on two modifications of the multiple regression model with log differences of variables. Research results showed a negative impact of economic growth and a positive impact of consumer prices and housing prices on the level of private credit. It has also been found that in the first period when the level of private credit to GDP exceeds the 100 per cent threshold households tend to borrow more than in other periods. In the second model distinguishing between periods when the level of country’s private credit was below 100 per cent of GDP and when this level was reached or exceeded the research showed that the effects of economic growth do not differ between periods of high and low indebtedness, but the difference becomes apparent when assessing the impact of household income and expenditure, thus confirming the impact of the marginal financial depth.

Keywords: level of private credit; high indebtedness; household income/expenditure; threshold (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:morgsr:v:87:y:2022:i:1:p:67-82:n:3

DOI: 10.2478/mosr-2022-0004

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