A cause for policy concern: the expansion of household credit in middle-income economies

dos Santos, Paulo L.

Abstract

This article discusses the significance of the recent growth in household credit across a range of middle-income economies. This growth is understood primar- ily as a result of policy, including the promotion of individual borrowing as a means to fund access to housing, education and health. A formal model of credit extension and allocation is developed, establishing that consumption lend- ing makes a comparatively stronger contribution to aggregate pro␣tability as well as ␣nancial fragility than production lending. Consumption lending may be understood to create distinctive endogenous tendencies to credit-market instabil- ity. The ␣ndings point to the need for a critical reconsideration of reliance on this lending for social and macroeconomic policy.

Citation

dos Santos, P. L. (2013). A cause for policy concern: the expansion of household credit in middle-income economies. International Review of Applied Economics, 27(3), 316-338. https://doi.org/10.1080/02692171.2012.721755

• Journal Article Type: Article
• Publication Date: May 1, 2013
• Deposit Date: Oct 18, 2012
• Journal: International Review of Applied Economics
• Print ISSN: 0269-2171
• Electronic ISSN: 1465-3486
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 27
• Issue: 3
• Pages: 316-338
• DOI: https://doi.org/10.1080/02692171.2012.721755