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

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

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 analy...

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Bibliographic Details
Main Authors: Chidera Favour EBELE, Gideon IHUARULAM
Format: Article
Language:English
Published: “Victor Slăvescu” Centre for Financial and Monetary Research 2025-06-01
Series:Financial Studies
Subjects:
credit market dynamics
financial access
dynamic panel analysis
household borrowing patterns
credit risk exposure
Online Access:http://fs.icfm.ro/Paper04.FS2.2025.pdf
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Summary: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.
ISSN:2066-6071

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